Campbell Soup Co CPB

Going into wide-moat Campbell’s fourth-quarter print, we think investors were primarily focused on whether the recent acceleration in top-line performance (prompted by COVID-19-related pantry stocking, as 95% of its sales stem from the retail channel) would persist after jumping 17% in its third fiscal quarter. Although it put up banner fourth-quarter marks (12% organic sales growth, 190 basis points of adjusted gross margin gains to 35.6%), shares faltered at a mid-single-digit clip on the results. However, we don’t posit this retreat was in response to its performance; rather, we attribute this modest pullback to management’s reluctance to offer a forward-year forecast (given the inherent uncertainty resulting from the pandemic) and a more tempered outlook for the first quarter (5%-7% organic sales growth and 6%-9% growth in adjusted operating income).