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Campbell's Strategic Efforts Bode Well: Should You Hold?
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Campbell Soup Company (CPB - Free Report) has been performing well on the back of its growth strategies, robust cost savings and impressive bottom-line performance. Also, its shares have outperformed the Zacks categorized Food – Miscellaneous/Diversified industry in the past six months. While the stock rose 2.8%, the industry declined 5.2%. In addition, this Zacks Rank #3 (Hold) stock boasts a VGM Score of ‘B’, with a long-term earnings growth rate of 5.3%, further highlighting its growth potential.
Campbell is progressing ahead of schedule with its cost-savings plan, as management now expects to achieve its savings target of $300 million by the end of fiscal 2017, which marks a year in advance. In addition, the company raised its cost savings target from $300 million by fiscal 2018 end to $450 million by fiscal 2020 end. Also, its strategy of concentrating on supply chain efficiencies, along with curtailing costs and reinvesting part of these savings in areas with high growth potential is likely to drive growth.
Additionally, Campbell’s focus on achieving profitable and sustainable growth is evident from its four-point strategy. These strategies aim at raising the level of transparency about the food that it produces and the ingredients used; portfolio diversification; shift toward advertising via mobile and digital devices, and strengthening the presence of its snacks brands across geographies, particularly in Asia. We believe that these strategies reflect Campbell’s commitment toward establishing a differentiated and significant position in the consumers’ community and the food industry.
Furthermore, Campbell undertakes acquisitions and joint ventures in a bid to enhance its brand portfolio and accelerate future growth. These ventures are likely to enhance the company’s manufacturing and distribution capabilities, alongside expanding its presence in the global market.
A look at Campbell’s earnings performance reveals that the stock has outpaced the Zacks Consensus Estimate by an average of 0.2% in the trailing four quarters. The company marked its second straight quarter of earnings beat as it reported second-quarter fiscal 2017 results. Further, the company witnessed continued gross margin expansion backed by its superb cost savings plan. Also, adjusted earnings for the fiscal are likely to grow in the range of 2–5% to $3.00−$3.09 per share. (Read more: Campbell Soup Tops Q2 Earnings, Keeps FY17 Guidance)
However, the performance of the company’s Campbell Fresh (C- Fresh) division has been disappointing of late. The dismay was mainly due to weak carrot sales and constraints arising from the Bolthouse Farms Protein PLUS drinks recall made in Jun 2016. These factors have been weighing upon C-Fresh’s results for a while now. In fact, management doesn’t expect this segment to witness growth this fiscal year, which remains a major threat to the company’s overall top line.
Further, challenging economic conditions, competitive pressure, along with food deflation remain serious threats to the company.
Stocks that Warrant a Look
Better-ranked stocks in the same industry include Lamb Weston Holdings, Inc. (LW - Free Report) , Ingredion Incorporated (INGR - Free Report) and Conagra Brands, Inc. (CAG - Free Report) .
Lamb Weston Holdings, with a long-term earnings growth rate of 3.2%, has increased 29.2% in the past six months. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingredion, with a long-term earnings growth rate of 11%, has a Zacks Rank #2 (Buy). Moreover, the stock grew 16.8% in the past one year.
Conagra Brands, a Zacks Rank #2 stock, has a long-term earnings growth rate of 8%. Further, the stock has jumped 23.8% in the past one year.
Everything You Need to Know About Snapchat BEFORE It Goes Public
You may be curious about the buzz surrounding Snap Inc.'s IPO on March 2. With the company expected to be valued around $22 billion, it is expected to be the largest IPO since 2014. But should you snap up this tech stock on Day 1?
In the 2017 IPO Watch List, you'll get an inside look at Snap's exciting prospects and potential challenges. You'll also learn about 4 other exciting tech companies with jaw-dropping growth. Each could go public in the coming months.
Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the latest scoop. Download thisIPO Watch List today for free >>
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Campbell's Strategic Efforts Bode Well: Should You Hold?
Campbell Soup Company (CPB - Free Report) has been performing well on the back of its growth strategies, robust cost savings and impressive bottom-line performance. Also, its shares have outperformed the Zacks categorized Food – Miscellaneous/Diversified industry in the past six months. While the stock rose 2.8%, the industry declined 5.2%. In addition, this Zacks Rank #3 (Hold) stock boasts a VGM Score of ‘B’, with a long-term earnings growth rate of 5.3%, further highlighting its growth potential.
Campbell is progressing ahead of schedule with its cost-savings plan, as management now expects to achieve its savings target of $300 million by the end of fiscal 2017, which marks a year in advance. In addition, the company raised its cost savings target from $300 million by fiscal 2018 end to $450 million by fiscal 2020 end. Also, its strategy of concentrating on supply chain efficiencies, along with curtailing costs and reinvesting part of these savings in areas with high growth potential is likely to drive growth.
Additionally, Campbell’s focus on achieving profitable and sustainable growth is evident from its four-point strategy. These strategies aim at raising the level of transparency about the food that it produces and the ingredients used; portfolio diversification; shift toward advertising via mobile and digital devices, and strengthening the presence of its snacks brands across geographies, particularly in Asia. We believe that these strategies reflect Campbell’s commitment toward establishing a differentiated and significant position in the consumers’ community and the food industry.
Furthermore, Campbell undertakes acquisitions and joint ventures in a bid to enhance its brand portfolio and accelerate future growth. These ventures are likely to enhance the company’s manufacturing and distribution capabilities, alongside expanding its presence in the global market.
Campbell Soup Company Price and Consensus
Campbell Soup Company Price and Consensus | Campbell Soup Company Quote
A look at Campbell’s earnings performance reveals that the stock has outpaced the Zacks Consensus Estimate by an average of 0.2% in the trailing four quarters. The company marked its second straight quarter of earnings beat as it reported second-quarter fiscal 2017 results. Further, the company witnessed continued gross margin expansion backed by its superb cost savings plan. Also, adjusted earnings for the fiscal are likely to grow in the range of 2–5% to $3.00−$3.09 per share. (Read more: Campbell Soup Tops Q2 Earnings, Keeps FY17 Guidance)
However, the performance of the company’s Campbell Fresh (C- Fresh) division has been disappointing of late. The dismay was mainly due to weak carrot sales and constraints arising from the Bolthouse Farms Protein PLUS drinks recall made in Jun 2016. These factors have been weighing upon C-Fresh’s results for a while now. In fact, management doesn’t expect this segment to witness growth this fiscal year, which remains a major threat to the company’s overall top line.
Further, challenging economic conditions, competitive pressure, along with food deflation remain serious threats to the company.
Stocks that Warrant a Look
Better-ranked stocks in the same industry include Lamb Weston Holdings, Inc. (LW - Free Report) , Ingredion Incorporated (INGR - Free Report) and Conagra Brands, Inc. (CAG - Free Report) .
Lamb Weston Holdings, with a long-term earnings growth rate of 3.2%, has increased 29.2% in the past six months. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingredion, with a long-term earnings growth rate of 11%, has a Zacks Rank #2 (Buy). Moreover, the stock grew 16.8% in the past one year.
Conagra Brands, a Zacks Rank #2 stock, has a long-term earnings growth rate of 8%. Further, the stock has jumped 23.8% in the past one year.
Everything You Need to Know About Snapchat BEFORE It Goes Public
You may be curious about the buzz surrounding Snap Inc.'s IPO on March 2. With the company expected to be valued around $22 billion, it is expected to be the largest IPO since 2014. But should you snap up this tech stock on Day 1?
In the 2017 IPO Watch List, you'll get an inside look at Snap's exciting prospects and potential challenges. You'll also learn about 4 other exciting tech companies with
jaw-dropping growth. Each could go public in the coming months.
Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the latest scoop. Download thisIPO Watch List today for free >>