Back to top

Analyst Blog

Zacks Equity Research

Campbell Soup Stays Neutral

GIS CPB

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Campbell Soup Company (CPB - Analyst Report) has remained successful in increasing its profitability through continued focus on brand expansion and effective cost management. However, we have maintained our long-term ‘Neutral’ recommendation on the stock as we remain slightly cautious due to rising input costs and intense competition.

Campbell recently reported its first-quarter fiscal 2013 results (ended October 2012).In accordance with its strategy of brand expansion and cost management, Campbell once again reported better-than-expected bottom-line results. The company’s quarterly earnings of 88 cents per share were 7.3% higher than the year-ago quarter’s earnings and were also ahead of the Zacks Consensus Estimate of 85 cents.

Further, Campbell continues to anticipate a sales growth in the range of 10%–12% and earnings between $2.51 and $2.57 per share in fiscal 2013.

Going forward, the company’s Bolthouse acquisition will prove to be accretive to its fiscal 2013 top and bottom lines. In addition, the company intends to boost its top line and increase return on investment through a new strategic framework, primarily focusing on brand expansion, and launch nearly 50 new products in fiscal 2013 while emphasizing on brand advertisement and consumer promotional activities.

We believe that Campbell’s prudent investment and strategic initiatives toward product innovation and brand building will increase its customer base and profitability. Moreover, the company’s continuous focus on research and development, to further differentiate its higher-margin sauce brands, will strengthen its competitive position in the international market.

On the flip side, rising commodity costs, intense competition from other established players and exposure to unfavorable foreign currency fluctuations may undermine the company’s growth prospects.

Due to its high exposure to international market, Campbell Soup remains prone to currency fluctuations, which is a major reason for continuous decline in its International Simple Meals and Beverages segment. Sales at this segment dipped 1.0% to $354.0 million in the first quarter 2013, primarily due to 1% decline in volume and mix and 3% negative impact from currency translation.

Moreover, Campbell operates in a highly-competitive food industry and experiences worldwide competition in all its principal products from well-established rivals like General Mills and H. J. Heinz, which may dent its performance going forward.

The above analysis supports our unbiased view on the stock. Campbell bears a Zacks #3 (Hold) Rank, while its prime competitors General Mills, Inc. (GIS - Analyst Report) and H. J. Heinz Company carry Zacks #2 (Buy) and Zacks #3 (Hold) Ranks, respectively.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%