Campbell Soup Company: Well Positioned To Continue The Growth Trajectory
- Campbell registered top line growth of 3% during the fiscal year 2014 and reported absolute revenue of $8.3 billion on the back of healthy acquisitions and new product launches.
- Operating margin shot up to 14.42% during 2014 compared to 13.41% in the corresponding period last year due to higher operational efficiency.
- The company has set aside $400 million funds to spend on capital projects in 2015.
- In the wake of the company’s recent acquisitions and divestitures to streamline its business and its long term growth strategy, Campbell is well positioned to continue the growth trajectory.
- The stock upholds a capital return potential of 43%. Also, it is offering a superior dividend yield of 2.96%.
- Campbell Soup doesn't score as high on our methodology, but we like the company's tried-and-true nature.
- Business quality (an evaluation of our ValueCreation and ValueRisk ratings) ranks among the best of the firms in our coverage universe. The company has an Economic Castle.
- We especially like its efforts to reinvigorate its North American soups business and the pace of new product launches.
- Let's have a look at the shares.
- The company posted fiscal 4Q earnings and revenues in line with expectations.
- We are still bearish on the company given the weakness in organic growth and declining soup sales.
- We felt the company could miss earnings and the note the in-line expectations still showed weakness.
Campbell Soup - Another Disappointment, No Appeal Here
- Campbell Soup posts a relatively soft fourth quarter earnings report.
- As the outlook for 2015 earnings implies another year of stagnation is anticipated.
- The lack of growth and premium valuation in combination with some leverage leaves little to no appeal in my eyes.
- For the quarter, Campbell matched on earnings but reported lackluster sales growth, sending shares down nearly 3% on Sep. 8.
- This news reaffirms my opinion that the company's results are volatile and that it's not a growth story but cannot affirm my view that it's necessarily an industry stalwart.
- Strong results were not anticipated in my previous work on the subject, but I did anticipate strong results in two of its segments that delivered.
Campbell Soup - Proactively Addressing Challenges Facing The Company, Potential For Buyout Provides An Additional 'Kicker'
- Campbell has an attractive portfolio of iconic brands that are adapting to the needs of the consumers with an increasing focus on organic, and health & wellness products.
- The company is focusing on understanding the requirements of the millennial consumer and Hispanics, and is also exploring newer distribution channels.
- Recently acquired businesses are expected to add significant value with a focus on fresh packaged categories and emerging markets distribution.
- The shares have underperformed, and currently provide a dividend yield of 2.8%. The company also expects to resume its share repurchase program.
- With meaningful room for improvements to cut costs and accelerate growth, Campbell represents an attractive target, with the most significant unknown being the Dorrance family's views on the sale.
Campbell Soup Company Looks Interesting But Is NOT A Bargain Heading Into Earnings
- For the quarter, analysts have pretty high expectations for Campbell, especially in regards to the company's bottom line.
- In recent years, the business has been pretty volatile, especially in terms of net income, but its history and industry makes it an interesting long-term play.
- In spite of this, however, investors should not view the business's shares as sitting in bargain territory.
- Campbell plans to launch over 200 new products in FY2015 and increase revenue to $10 billion within 5 years.
- However, shares are trading well above their 5 year average p/e and p/s ratios.
- Current ratio of 0.69 and quick ratio of only 0.42 are a good reason to look elsewere.
- Although Buffett's elephant gun is close to reloaded, it's unlikely he'll be firing at these two companies.
- At first glance, both look to be right up Buffett's alley when it comes to simple cash flow generative businesses.
- But they both operate in businesses that appear to be in fundamental decline.
- Campbell has an above average dividend yield.
- The company controls nearly 60% of the US retail soup market.
- Campbell's has a long history of rewarding shareholders.
- The company's 3rd quarter results were disappointing.
- Shareholders of Campbell's can expect modest growth going forward.
- Campbell Soup does not sell more soup after a harsh winter and new product introductions.
- Sales and earnings for the coming quarter will be soft again.
- Premium valuation is not warranted given poor growth and leverage.
Campbell Soup's Dividend Growth Outlook Has ImprovedValuentum • Wed, Mar. 26
- Campbell Soup's dividend growth outlook has improved since our last update.
- The Valuentum Dividend Cushion tool, which is used by financial advisors, is based on a company's future fundamental cash-flow generation and the health of its balance sheet.
- Campbell Soup's Dividend Cushion measure is now north of the threshold to receive a good rating.
Positive Sector Outlook Supports Campbell Soup Company
Fri, Oct. 10, 2:05 PM
- There's more consumer staples names to add to the list of out-performers on the day with investors peeling off some tech and momentum favorites.
- The partial list below represents stocks up at least 1% on the day with a dividend yield of over 2%.
- Back in favor: AVP, KO, MO, RAI, BUD, PF, BGS, DPS, CPB, LO, DF.
Tue, Oct. 7, 9:54 AM| Comment!
Mon, Sep. 22, 5:19 PM
Mon, Sep. 8, 12:52 PM
- Campbell Soup (CPB -2.3%) says the turnaround of sales is taking longer than it anticipated due to a challenging consumer environment.
- Management expects a more consistent first half for its FY15.
- Innovation in brands is on tap for next year with a goal to recharge organic sales. The Prego and Pace brands are mentioned.
- Longer-term financial targets weren't changed by the company, even though Campbell needs a point of sales growth and two points of EBIT gains to get to the bottom of its range. CEO Denise Morrison says M&A could be an option as a mechanism to reach those targets.
- Earnings call webcast
Mon, Sep. 8, 7:48 AM
- Campbell Soup (NYSE:CPB) reports organic sales fell 2% in FQ4.
- Acquisitions added 3% to growth while promotional spending clipped 2%.
- Gross margin rate -210 bps to 34.1%.
- Segment growth: U.S. Simple Meals +5% to $518M; Global Baking and Snacking +10% to $628M; International Simple Meals and Beverages +1% to $188M; U.S. Beverages +6% to $184M; Bolthouse and Foodservice +11% to $334M.
- Guidance: Full-year EPS of $2.45-$2.60 expected vs. $2.54 consensus.
- CPB -1.9% premarket
Mon, Sep. 8, 7:24 AM
Sun, Sep. 7, 5:30 PM
Fri, Aug. 15, 11:09 AM
Mon, Jul. 21, 8:09 AM
- Campbell Soup (NYSE:CPB) says it expects its 2015 performance to come in below its long-term targets for EPS growth of 4%-6% and sales growth of 3%-4%, although sales are expected to improve in its fiscal year that begins Aug. 4.
- CPB reaffirms FY 2014 guidance, expecting growth of ~3% in net sales, which equates to ~$8.29B and in-line with analyst consensus; sees EPS growing at the low end of $2.53-$2.58 guidance vs. $2.53 consensus.
- CPB plans to provide specific FY 2015 guidance when it reports Q4 results on Sept. 8.
- CPB also anticipates resuming share repurchases in the new fiscal year.
Wed, Jul. 16, 2:20 PM
- Campbell Soup (CPB +1.2%) fits the profile of a company that Warren Buffett might be interesting in acquiring, according to writer Gene Marcial.
- Besides the obvious Buffett filters (modest P-E ratio, dividend backstop, strong brands), Campbell Soup still has room for margin improvement in the right hands, note industry watchers.
Wed, Jul. 2, 10:15 AM
- Food companies should get ahead of the curve by creating gluten-free children's food in the U.S., says Mintel.
- The market research firm notes a gluten-free trend in Europe which started with infant food has quickly moved into children's food.
- Kellogg (K) is already in the game with a gluten-free version of Rice Krispies which has generating $9.2M in sales in two years.
- Related stocks: POST, SJM, GIS, CPB, KRFT, MDLZ, PF.
Mon, Jun. 30, 1:04 PM
- A measure of corn inventories came in higher than expected today sending corn futures to their sharpest drop in close to a year.
- The USDA says inventories were 3.854B bushels on June 1 vs. 3.723B forecast and 2.766B a year ago.
- High corn prices has been a concern in the food sector (GIS, K, POST, KO, PEP, PPC, TSN, CPB, SJM) where sellers have warned on their ability to pass on the higher costs on to consumers.
- USDA crop report
- Related EFTs: CORN, JJG, GRU
Wed, Jun. 25, 5:09 PM
Tue, Jun. 17, 8:48 AM
Mon, Jun. 9, 9:53 AM
- Annie's (BNNY +1.5%) is being teed up by analysts on Wall Street as a potential takeover candidate.
- The company boasts a strong brand in the organic sector, while shares have peeled off 33% YTD due in part to cost pressures.
- Campbell Soup (CPB), Nestle (NSRGY), and General Mills (GIS) all fit the profile of a food giant that could make a run at Annie's.
Tue, May. 27, 7:28 AM
- A $6.4B offer by Pilgrim Pride's (PPC) to buy Hillshire Brands (HSH) could rattle the food sector.
- For starters, the deal could spoil Hillshire's offer on the table to buy Pinnacle Foods (PF).
- The quick analyst take on a PPC-HSH combination is favorable with the companies focused in different areas (chicken vs. packaged meat) which could lead to easy access to new distribution channels.
- Premarket: HSH +22.9% to $45.49, PF -5.3% to $31.50.
- Also on merger watch in the food sector: THS, SJM, GIS, KRFT, CPB, ADM, BGS, RAH, HAIN, K CAG
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