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For the past several years, investors in Campbell Soup (CPB) have been getting a steady diet of vichyssoise; that's starting to change.

Change is not something that's taken lightly at Campbell. Go to your pantry and grab a can. Any flavor. Go ahead, I'll wait.

Good, you're back, and I see you've picked my favorite. If you would, look closely at the gold medal seal in the middle of the label. That medal was presented to the company at the 1900 Paris Exhibition. The colors of the can are the team colors of the 1896 Cornell football team. If a housewife from 1901 was dropped into a supermarket of today, one of the few things she would recognize would be those ubiquitous red and white cans. No, those folks at the Campbell Soup Company don't rush into things.

CPB's share price appreciated on news of the purchase of Heinz (HNZ) by 3G Capital and that Buffett fellow from Omaha. Back in 2008, Heinz CEO William Johnson remarked on what a nice couple Campbell and Heinz would make. I'm sure he's right, but the heirs of John Dorrance might have something to say about any corporate weddings, shotgun or otherwise, that might involve CPB. Mr. Dorrance, you see, was the man who put the condensed in Campbell's Condensed Soups and his progeny own over half the stock.

CPB is made up of three business segments. First, we have the Simple Meals Division which consists of the soups and ready-to-serve meals. Next is the Baked Snacks Division a.k.a. Peppridge Farms. And last is the Healthy "Gee, I could have had a V-8" Beverage Division.

The first division is CPB's backbone and the one which needs the most attention. Soup sales have been slipping for the last few years as younger consumers opt to eat out or try more exotic fare at home. Campbell is trying to tap this pool of shoppers with its Go! Soup line of ready-to-eat meals. My boundless dedication, and the fact that I needed toothpaste, prompted me to go to the supermarket and do a little research. In the Campbell's section of the soup aisle, I discovered Coconut Curry with Chicken and Shiitake Mushrooms, and also Chicken and Quinda with Pobland Chilies. Coconut curry? Shiitake? Quinda and pobland chilies? I'm sure it's all delicious and I'll take your word for it. I also found a bevy of new Campbell's Condensed soups populating the shelves. I'll mention two. Chicken Mushroom Barley and Harvest Orange Tomato. I mention them because I actually recognized the ingredients. I lingered for a bit to see if anyone bought any of the new selections. The three shoppers who stopped and picked out Campbell products were all Chunky Style fans. Oh well.

Pepperridge Farm, CPB's second largest revenue producer, has been doing just fine. In fact, for quite some time Peppridge has been picking up the slack in earnings left by the Simple Meals Division. Just recently, Denise Morrison, Campbell CEO, stated unequivocally that the company would be growing its snack division through acquisitions. Additionally, Campbell just opened a $30 million addition to the Pepperridge headquarters that will allow Pepperridge to create and test new products on site.

Beverage sales have been disappointing. Campbell's recent purchase of Bolthouse Farms for $1.5 billion is a move designed not only to juice up (I couldn't resist) those moribund sales, but also put CPB in the fresh food section of your local supermarket. Over half of the $690 million Bolthouse realized in sales a couple of years ago came from baby carrots. Refrigerated juices and salad dressing comprised the remainder of sales.

$1.5 billion. That's a lot of soup. CPB certainly didn't snatch up Bolthouse on the cheap. I believe, however, that a company as conservative as Campbell would spend that kind of money only if they were reasonably sure of a decent return on their investment.

So far, results have been mixed. After booting out those irksome restructuring charges, net earnings were up 6% this quarter over the prior year's quarter. Soup sales were up a bit and the snack division continues to perform admirably. According to the corporate-speak, the Bolthouse integration is progressing well. Alas, Campbell's Beverage Division is still ailing and needs more work.

You're an intelligent investor. You know that CPB isn't going to set your portfolio on fire. The company pays a dividend yielding 2.8% with a payout ratio of under 50%. The dividend has been on the rise since 2004. The company has some leverage but ample cash flow to cover interest expense. Even with Campbell's lackluster performance over the last five years, a $10,000 investment would have grown to nearly $15,000.

If CPB can achieve some sustainability in its earnings growth, the stock could be one to tuck under your pillow. An annual 5% growth rate in earnings coupled with the dividend yield of nearly 3% is a recipe for a respectable return.

And then there's always the possibility that if Campbell doesn't spruce up its numbers, they might follow in Heinz's footsteps. Who knows, maybe all those Dorrance descendants might be willing to sell and use the money to buy some Andy Warhol originals.

There are many ifs to consider before making any decision about CPB's future success. If commodity prices behave themselves. If the Bolthouse integration goes well. If soup sales continue to improve. If the beverage segment stays off life support. If. If. If. My father was a wise man. He told me to never listen to a business proposition past the second if. It's something to think about.

Do your own investigating and let me know what you think.

Source: Campbell Soup: Starting To Simmer