Updated Research Report on Campbell Soup - Analyst Blog

On Mar 13, 2014 we issued an updated research report on Campbell Soup Company CPB, based on better-than-expected second-quarter fiscal 2014 results. The strong results have triggered an uptrend in the Zacks Consensus Estimate. The company's brand expansion strategy and cost containment efforts were the driving factors.

The company's top line of $2,281 million and bottom line of 76 cents easily surpassed the Zacks Consensus Estimate while rising 6% and 19%, respectively, year over year. With promising top and bottom-line growth, Campbell appears to be an impressive option for investors in the near future as it has surpassed the Zacks Consensus Estimate in 11 out of 12 quarters. Going forward, this upbeat performance is expected to continue as evident from management s impressive guidance for fiscal 2014.

For fiscal 2014, Campbell expects sales from continuing operations to augment 4–5%, while adjusted earnings per share is projected to increase 2–4% and lie in the band of $2.53–$2.58.

Further, the company's focus on its brand portfolio enhancement is evident from its recent acquisitions and joint ventures. Campbell acquired three new growth engines in fiscal 2013 including Bolthouse Farms, Plum Organics and the Kelsen Group, which cater to combined sales of nearly $1 billion. Further, the company has developed two joint ventures in Mexico with Grupo Jumex and Conservas La Costena that enhance Campbell's manufacturing and distribution capabilities as well as its presence in the global market.

Campbell also intends to boost its top line and increase return on investment through strategic frameworks. Its focus on augmenting the North American soup and simple meal business and expanding overseas operations bode well for future growth. Further, we believe that the company's prudent investment and strategic initiatives toward product innovation and brand building will broaden its customer base and profitability.

However, rising commodity costs, intense competition and exposure to foreign currency fluctuations continue to be challenging factors for the company, which may undermine its operating performance.

Campbell currently holds a Zacks Rank #3 (Hold).

Key Picks from the Sector

Other better-ranked stocks in the same industry include Diamond Foods, Inc. DMND, The Hain Celestial Group, Inc. HAIN and Post Holdings, Inc. POST, all sporting a Zacks Rank #2 (Buy).