Earnings Tell a Different Story: US Economy Strong Despite Labor and Inflation Data

Earnings data suggests the US economy is doing better than expected, despite recent labor and inflation data indicating otherwise. Companies are absorbing tariff increases, maintaining profit margins, and earnings are stronger than anticipated. This has led Ed Yardeni to revise his market expectations, potentially predicting a stock market above 6,800 by the end of the year.

Campbell’s Company (CPB) reported better-than-expected earnings for the fourth quarter, with sales growth of 1% year-over-year (Y/Y) to $2.32 billion, slightly missing the analyst consensus estimate of $2.33 billion. Adjusted earnings per share (EPS) of 62 cents exceeded the consensus estimate of 56 cents These Analysts Boost Their Forecasts On Campbell's Following Better-Than-Expected Q4 Earnings^[1]. The company expects full-year sales to fall between $10.035 billion and $10.240 billion, representing a decline of 2% to flat growth. Adjusted EBIT is projected to fall 9% to 13%, with adjusted EPS forecast in the range of $2.40 to $2.55.

Campbell’s CEO Mick Beekhuizen attributed the strong performance to the continued strong in-market performance of their leadership brands, outpacing category growth as consumers continued to cook at home These Analysts Boost Their Forecasts On Campbell's Following Better-Than-Expected Q4 Earnings^[1]. Despite the positive earnings report, Campbell’s shares fell 2.5% to trade at $32.89 on Thursday.

Analysts have responded to the earnings announcement by adjusting their price targets. Bernstein analyst Alexia Howard maintained an Outperform rating and raised the price target from $38 to $39. TD Cowen analyst Robert Moskow maintained a Hold rating and raised the price target from $29 to $31. B of A Securities analyst Peter Galbo maintained an Underperform rating and raised the price target from $29 to $30 These Analysts Boost Their Forecasts On Campbell's Following Better-Than-Expected Q4 Earnings^[1].

The resilience of Campbell’s earnings, despite the company absorbing tariff increases, reflects a broader trend of U.S. companies maintaining profit margins and reporting stronger-than-expected earnings. This trend has led Ed Yardeni to revise his market expectations, potentially predicting a stock market above 6,800 by the end of the year.