Campbell Soup a Hold on Costs

Campbell Soup Company's (CPB - Analyst Report) Transformation and Driving Quality Growth Plans are improving the topline through a combination of improved products, attractive packaging, a new retail shelving system, and more effective marketing. Price increases and a line of lower sodium soups helped Campbell accomplish management's financial goals in the last two fiscal years.

Management continues to optimize the portfolio with the introduction and reformulation of lower sodium soups. However, cost inflation remains a concern. The Hold recommendation is maintained.

With its strong soup franchise with high but slowly eroding gross margins, Campbell's stock should trade in a P/E multiple range of 13 to 20. The target price of $28.25 is 13.5 times 12-month trailing EPS.

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