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Campbell (CPB) Looks Appealing on Portfolio Refinement Moves
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Campbell Soup Company (CPB - Free Report) has been able to maintain strong footing in the food space, courtesy of well-chalked efforts to boost portfolio strength. This Zacks Rank #2 (Buy) company gained 3.8% in the past three months compared with the industry’s rise of 0.3%. Let’s take a closer look at the factors that have made Campbell an attractive pick.
Efforts to Bolster Portfolio is on Track
Campbell is undertaking important measures to refine portfolio, by exiting underperforming businesses and focusing on growth-oriented areas. Earlier, the company had revealed intentions to divest non-key businesses — Campbell International (which includes Arnott’s and the Kelsen Group) and Campbell Fresh (C-Fresh).
In sync with such strategies, the company completed the divestiture of the Bolthouse Farms business to Butterfly Equity’s affiliate for $510 million. Also, it completed the sale of U.S. refrigerated soup and Garden Fresh Gourmet businesses during the third quarter of fiscal 2019. As a result of such moves, the company has successfully exited the underperforming C-Fresh unit.
The company was struggling with its C-Fresh segment for quite some time on account of weak brand banners, which makes the divestiture of this unit appropriate. Further, management intends to utilize net sale proceeds to reduce debt load.
Moreover, as part of the portfolio review and board-led strategy, management plans to focus on two separate businesses in the company’s key North American market — Campbell Snacks as well as Campbell Meals and Beverages. We note that strengthening presence in the fast-growing snacks arena is part of Campbell’s core strategies.
Markedly, the company acquired Snyder's-Lance in the third quarter. The buyout is enhancing performance in the global biscuits and snacks portfolio. Among other moves to strengthen portfolio, the company acquired leading organic broth and soup producer — Pacific Foods — to expand in the fast-growing organic food space. Apart from these, the company is on track with innovations and initiatives to augment marketing support for its brands.
Saving Initiatives Bode Well
Campbell is progressing well with its multi-year cost-saving program, which includes measures like boosting supply-chain efficiencies and curtailing various cost elements. A portion of these savings are being reinvested in areas with high-growth potential. During the third quarter of fiscal 2019, Campbell generated savings worth $55 million, which included synergies associated with Snyder’s-Lance’s buyout. This generated savings from the program worth $605 million. On a year-to-date basis, savings from the program amounted to $150 million.
The company now expects to generate nearly $180 million in fiscal 2019, including savings from C-Fresh. Further, management anticipates generating cumulative annualized savings from continuing operations of $850 million by fiscal 2022 end.
Wrapping Up
Clearly, Campbell seems to be striking the right chords to boost business performance. We expect these lucrative moves to help the company to cushion hurdles such as soft weak U.S. soup sales and rising input costs. That said, we expect the company to continue in investors good books.
Looking For More Consumer Staples Stocks? Check These
General Mills, Inc (GIS - Free Report) , with an expected long-term earnings growth rate of 7%, also carries a Zacks Rank #2.
Conagra Brands Inc. (CAG - Free Report) , with long-term earnings growth rate of 7%, carries a Zacks Rank #2.
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.
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Campbell (CPB) Looks Appealing on Portfolio Refinement Moves
Campbell Soup Company (CPB - Free Report) has been able to maintain strong footing in the food space, courtesy of well-chalked efforts to boost portfolio strength. This Zacks Rank #2 (Buy) company gained 3.8% in the past three months compared with the industry’s rise of 0.3%. Let’s take a closer look at the factors that have made Campbell an attractive pick.
Efforts to Bolster Portfolio is on Track
Campbell is undertaking important measures to refine portfolio, by exiting underperforming businesses and focusing on growth-oriented areas. Earlier, the company had revealed intentions to divest non-key businesses — Campbell International (which includes Arnott’s and the Kelsen Group) and Campbell Fresh (C-Fresh).
In sync with such strategies, the company completed the divestiture of the Bolthouse Farms business to Butterfly Equity’s affiliate for $510 million. Also, it completed the sale of U.S. refrigerated soup and Garden Fresh Gourmet businesses during the third quarter of fiscal 2019. As a result of such moves, the company has successfully exited the underperforming C-Fresh unit.
The company was struggling with its C-Fresh segment for quite some time on account of weak brand banners, which makes the divestiture of this unit appropriate. Further, management intends to utilize net sale proceeds to reduce debt load.
Moreover, as part of the portfolio review and board-led strategy, management plans to focus on two separate businesses in the company’s key North American market — Campbell Snacks as well as Campbell Meals and Beverages. We note that strengthening presence in the fast-growing snacks arena is part of Campbell’s core strategies.
Markedly, the company acquired Snyder's-Lance in the third quarter. The buyout is enhancing performance in the global biscuits and snacks portfolio. Among other moves to strengthen portfolio, the company acquired leading organic broth and soup producer — Pacific Foods — to expand in the fast-growing organic food space. Apart from these, the company is on track with innovations and initiatives to augment marketing support for its brands.
Saving Initiatives Bode Well
Campbell is progressing well with its multi-year cost-saving program, which includes measures like boosting supply-chain efficiencies and curtailing various cost elements. A portion of these savings are being reinvested in areas with high-growth potential. During the third quarter of fiscal 2019, Campbell generated savings worth $55 million, which included synergies associated with Snyder’s-Lance’s buyout. This generated savings from the program worth $605 million. On a year-to-date basis, savings from the program amounted to $150 million.
The company now expects to generate nearly $180 million in fiscal 2019, including savings from C-Fresh. Further, management anticipates generating cumulative annualized savings from continuing operations of $850 million by fiscal 2022 end.
Wrapping Up
Clearly, Campbell seems to be striking the right chords to boost business performance. We expect these lucrative moves to help the company to cushion hurdles such as soft weak U.S. soup sales and rising input costs. That said, we expect the company to continue in investors good books.
Looking For More Consumer Staples Stocks? Check These
The Chefs' Warehouse (CHEF - Free Report) , with a Zacks Rank #2 (Buy), has long-term earnings growth rate of 15%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
General Mills, Inc (GIS - Free Report) , with an expected long-term earnings growth rate of 7%, also carries a Zacks Rank #2.
Conagra Brands Inc. (CAG - Free Report) , with long-term earnings growth rate of 7%, carries a Zacks Rank #2.
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.
Click to get it free >>