High-quality foods and simple meals manufacturer,
Campbell Soup Company
) remains on our Neutral list with a target price of $44.00.
We are impressed with Campbell's consistent positive earnings
surprise trend, strong revenue growth and impressive management
guidance. However, we remain slightly cautious on the company's
growth prospect due to rising commodity costs.
Looking at its earnings surprise history, Campbell has beaten
the Zacks Consensus Estimates 16 times in the past 19 quarters.
The average positive surprise in the trailing quarters comes to
The most recently reported earnings of 70 cents per share for
second quarter fiscal 2013, handily surpassing the Zacks
Consensus Estimate of 66 cents, resulted in a surprise of 6.1%.
Moreover, quarterly earnings surged 9% year over year, primarily
driven by a 10.5% rise in the top line.
Looking ahead, the Zacks Rank #2 (Buy) company continues to
anticipate sales growth in the range of 10%-12% and earnings
between $2.51 and $2.57 per share in fiscal 2013, reflecting an
increase of 3%-5% from 2012 level. The current Zacks Consensus
Estimate stands at $2.55 per share.
Apart from strong fourth-quarter results, Campbell's growth
story looks compelling. We believe Campbell's prudent investment
and strategic initiatives toward product innovation and brand
building will increase its customer base and profitability.
On the flip side, we remain cautious on the stock due to
rising commodity prices, which may undermine the company's future
performance. The raw and packaging materials used in the
company's business include tomato paste, grains, beef, poultry,
vegetables, steel, glass, paper and resin. Many of these
materials are subject to price fluctuations.
Further, Campbell operates in a competitive environment and
strives to maintain its market share, actively competing with
numerous manufacturers and marketers of high-quality, branded
convenience food products. The company primarily competes on the
basis of brand recognition, quality, taste and price. Failure to
offer high-quality differentiated products at a competitive price
may hamper Campbell's market share, and thereby it's top and
Other Stocks Worth Considering
Other stocks worth considering in the food industry are
Chiquita Brands International Inc.
Flowers Foods, Inc
J&J Snack Foods Corp
). All these companies hold Rank #1 (Strong Buy).
CAMPBELL SOUP (CPB): Free Stock Analysis
CHIQUITA BR INT (CQB): Free Stock Analysis
FLOWERS FOODS (FLO): Free Stock Analysis
J&J SNACK FOODS (JJSF): Free Stock Analysis
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