Campbell Soup is Sure Making People Go Yum Yum at Home (CPB, GIS, SLE)
The world's largest soup maker, Campbell Soup Co (NYSE: CPB), has announced strong results, with its EPS easily beating the consensus forecasts by $0.06. CPB’s profits were boosted by price hikes, falling costs for ingredients such as grains and tomatoes and efforts to reduce overhead costs. However, CPB’s sales fell by 2.1% to $2.2 billion, with soup sales in the US slipping by 3%.
Apart from healthy results, Campbell Soup has raised its sales growth forecasts to 4%-5%, from 3%-4%. Moreover, CPB also expects to see 9%-11% earnings growth for the year, as compared to the previous forecast of 5%-7%. Over the year, CPB’s earnings would benefit from currency translation.
Another key reason for CPB’s performance is a weak economic environment. As the economy is suffering, Campbell Soup is benefiting. With more people resorting to cooking more at home than going out to save money, they are opting for relatively lower-priced CPB’s soup to boost their flagging spirit and get some of the same zing as the outside food.
Other companies that may benefit from the trend of eating at home are General Mills (NYSE: GIS), Kraft Foods (NYSE: KFT), The JM Smucker Company (NYSE: SJM), Sara Lee Corp (NYSE: SLE).
