Shares of Campbell Soup Company (CPB) are riding high so far in 2013 with the manufacturer of popular convenience food brands experiencing a 37 percent rise in its stock year-to-date. On May 20, Campbell Soup Company is scheduled to report its third quarter 2013 earnings results, covering the three month period from February to April, and will hold a conference call for investors at 10AM Eastern Daylight Time. For a company that was founded during the post-bellum period after the U.S. Civil War, Campbell Soup Company is still generating excitement in 2013 after nearly 145 years in business. Specifically, the company will update analysts and investors during Monday's conference call about several innovative new food and beverage products that were announced at the end of 2012. The third quarter 2013 release will also provide insights into the financial performance of Campbell Soup Company with analysts expecting a consensus earnings estimate of 56 cents per share. The spectacular price performance of CPB shares in 2013 were impacted by the beneficial effects of a substantial buyout of one of the company's competitors and the excitement surrounding new product advancements of existing popular brands. By taking a closer look at how these developments will contribute to the prospects for Campbell Soup Company, stockholders and potential new investors can gain greater perspective ahead of CPB's third quarter 2013 earnings report.
Although Campbell Soup Company has been around for almost a century and a half in an industry that is regarded by many investors as relatively ordinary, this company's present standard of pioneering advancements is exceptional by any reasonable measure. In September 2012, chief executive officer Denise Morrison announced the opening of a new $30 million innovation center for Campbell Soup's bakery and snack foods business segment Pepperidge Farm, which is located in a 34,000 square foot facility at the brand's headquarters in Norwalk, Connecticut. The innovation center began introducing new product lines in a timely manner as Pepperidge Farm announced a clever new twist on its popular Goldfish brand at the Macy's Thanksgiving Day parade in late November 2012. The company's new Goldfish My Way product allows customers to customize the iconic crackers for gifts and special events with uploaded photographs and personal messages printed on individualized gift boxes containing the beloved snacks. Themes for holidays, birthdays, and other special events are selected by customers on the Goldfish My Way website, which also allows gift givers to choose customized colors for the fish-shaped crackers. The campaign is a relatively low-cost initiative with potentially big payoff in the form of higher profit margins for Goldfish snacks at Campbell Soup's Pepperidge Farm unit as the brand awareness expands for the customizable gift snacks.
Around the same time last November, Campbell Soup plugged into the Facebook generation as it targeted a new soup product and marketing campaign specifically geared for Millenials. By using the power of web platforms such as social news content site Buzzfeed, digital music service Spotify, and the online video game Angry Birds, the company identified truly innovative methods to reach the 18-34 year old consumer demographic in order to market its new line of Campbell's Go microwavable soups for busy young people who have to plan their meals around active schedules. In another innovative move last November, Campbell Soup Company announced a licensing deal for its V8 Splash and Fusion brands with home carbonation system maker SodaStream, which will enable customers to transform their favorite V8 fruit drinks into carbonated beverages. All of these initiatives reveal that for a company in an industry that is viewed by many investors as stagnant and boring, Campbell Soup Company is continuing in the tradition of Dr. John T. Dorrance - who invented condensed soup in 1897 - by pioneering some exciting new ways of marketing their well known and established brands.
For CPB shares, 2013 started with a strong performance for the first six weeks of the year that only intensified as news that one of its competitors was being acquired impacted the stock. Shares of CPB closed 2012 at $34.89 and by mid-February had risen to $38.18 per share before the announcement of the $28 billion acquisition of H.J. Heinz Company by an investment partnership comprised of 3G Capital and Berkshire Hathaway. The news rippled into CPB stock as volume spiked to 8.25 million shares traded on the day the deal was announced on February 14, which is substantial considering Campbell Soup Company normally has average volume of 1.62 million on a daily basis. Since the announcement three months ago of the Heinz acquisition by Berkshire Hathaway and 3G Capital, CPB shares have risen an impressive 25 percent in a powerful rally that shows no signs of weakness. Significantly, Berkshire Hathaway agreed to purchase H.J. Heinz Company for 22 times earnings, which places a new fair market value for other food companies with large market capitalizations and iconic brands. Given Warren Buffett's reputation as a disciple of Benjamin Graham's value investing, the fact that CPB trades at a price multiple of only 20.5 shows that Campbell Soup is possibly slightly under-valued at its current market price of $47.85 per share. Clearly, investors recognized this value proposition since the Heinz announcement on February 14 and have acted accordingly by bidding up shares of CPB in the last three months.
From the technical analysis perspective, the CPB chart shows shares are trading comfortably above their respective 8-day and 20-day exponential moving averages of $47.17 and $46.56 per share. The stock successfully tested these key indicators only one week ago and shares reacted by staging an impressive price move in the days leading up to the scheduled May 20 earnings announcement. On May 16, CPB shares reached a new all-time high during intra-day trading when they touched $48.43 per share before settling for the session at $47.85 per share. A vital fact for potential buyers of CPB stock is that shares have continued to make new 52-week highs since April 16 and show no apparent signs of weakness in a powerful momentum rally that began on January 2, 2013.
Analysts providing coverage of CPB stock currently have a consensus hold rating on the company with an average price target of $37.87 per share, which is substantially below its current market price. This condition bodes well for shareholders of CPB as the stock currently has only 2 buy recommendations compared to 14 hold and 3 sell ratings. This potentially translates into a series of upgrades and boosted price targets by analysts forced to play catch-up throughout the next quarter if CPB's third quarter 2013 earnings are favorably received by the market. For investors interested in pursuing a new position or adding to an existing portfolio in CPB shares, the third quarter 2013 earnings report and conference call on May 20 will provide greater perspective into management's view of the company's prospects as the stock of Campbell Soup Company enjoys a marvelous year-to-date performance.