Campbell's Will Boost Earnings Per Share And International Sales With Plum Organics Acquisition

Less than a month after Hain Celestial (HAIN) scooped up baby food maker Ella's Kitchen, Campbell Soup Company (NYSE:CPB) has made a similar acquisition. Campbell's scooped up popular organic food brand Plum Organics. The new acquisition will boost Campbell's presence in the children's food segment and will help grow revenue and earnings per share going forward.

Plum Organics, founded in 2007, is the number two brand of organic baby food in the United States. Overall, Plum is the number four baby food overall in the United States. Plum Organics offers food and snacks in the baby and toddler sector. According to the press release, baby food is a $2 billion market. The category has grown 43% annually over the 2010-2012 period.

Campbell's currently owns brands in the soup, beverage, and snack categories aimed at children. Denise Morrison, president and chief executive officer of Campbell's, had this to say of the acquisition, "Plum Organics' nutritious, on-trend products are a great addition to our North American portfolio of leading brands. It represents another step toward our long-term goal of shifting Campbell's center of gravity."

One area of growth for Campbell's through the acquisition will be international expansion. Plum Organics offers over 150 products, but only sells in the United States and United Kingdom. Impressively enough, Plum Organics has sold 200 million products since its founding. Campbell will now shift to getting Plum Organics on shelves overseas alongside its own children's brands like V8 juice and Goldfish crackers.

In 2012, Plum Organics had $93 million in sales. Campbell's said Plum Organics would not affect 2013 sales, but I am curious to hear how it will impact earnings in 2014. Hain Celestial estimated a positive impact of $0.05 to $0.08 per share in earnings from Ella's Kitchen. That came from a company that generated $70 million in 2012 sales. The deal is expected to close in the fourth quarter in 2013.

Campbell's reported a great third quarter. Sales increased overall by 15%, including 4% of organic growth. Net earnings were $181 million, representing earnings per share of $0.57. International business saw huge growth of 27%. This was led by the expansion of the Pepperidge Farm in Canada. These sales and earnings numbers were also impressive considering juice sales were weak and the company lost a major account in its foodservice segment.

Sales in the third quarter breakdown as follows:

· US Simple Meals: $627 million, +11%

· Global Baking and Snacking: $568 million, +5%

· International Simple Meals and Beverages: $357 million, +2%

· US Beverages: $198 million, -5%

· Bolthouse and Foodservice: $344 million

Plum Organics represents another great acquisition by Campbell's. The well known soup and snack brand bought Bolthouse Farms recently and saw generated sales of $205 million in the third quarter. By taking Plum Organics international, Campbell shareholders will see this deal payoff.

I recommended buying shares of Campbell's back in September. At that time, I noted international exposure as one of the key areas for growth. Shares have passed the $40 goal I set and now trade above $45. Shareholders have seen shares increase over 31.5% since my recommendation. Analysts on Yahoo Finance see the company earning $2.60 per share in fiscal 2013 and $2.74 in fiscal 2014. Expect Plum Organics and better than expected Bolthouse Farms sales increase analysts' projected earnings in 2014.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CPB, HAIN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.