High-quality foods and simple meals manufacturer,
Campbell Soup Company
) remains on our Neutral list with a target price of $45.00.
We are impressed with Campbell's consistent positive earnings
surprise trend, strong revenue growth and optimistic guidance.
However, rising commodity costs remain a looming threat.
From its earnings surprise history, we see that Campbell has
beaten the Zacks Consensus Estimate 17 times in the past 20
quarters, with an average positive surprise of 6.1%.
The recently reported earnings of 62 cents per share for
third-quarter fiscal 2013 which beat the Zacks Consensus Estimate
of 56 cents, consequently resulting in a surprise of 10.7%.
Moreover, quarterly earnings surged nearly 11% year over year,
primarily driven by a 15% rise in the top line.
Buoyed by strong quarterly results, the Zacks Rank #2 (Buy)
company raised its fiscal 2013 adjusted earnings per share
guidance range to $2.58-$2.62 from $2.51-$2.57 as forecasted
earlier. The current Zacks Consensus Estimate is $2.61 per
Further, Campbell Soup expects its sales for fiscal 2013 to
reach the higher-end of the previously forecasted range of
10%-12%. Moreover, adjusted EBIT for fiscal 2013 will likely be
at the higher end of the company's earlier guidance range of
Apart from strong fourth-quarter results, Campbell's growth
prospects appear promising. We believe the company's prudent
investment and strategic initiatives toward product innovation
and brand building will increase its customer base and
On the flip side, rising commodity prices pose a challenge and
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. Significantly, many of these items are subject to price
Further, Campbell operates in a competitive environment and
strives to maintain its market share, actively contesting 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 consequently its top and
Other Stocks Worth Considering
Other stocks that are worth a look in the food industry
Omega Protein Corp
Flowers Foods, Inc
J&J Snack Foods Corp
). Omega and Flowers Foods carry a Zacks Rank #1 (Strong Buy)
while J&J Snack has a Zacks Rank #2 (Buy).
CAMPBELL SOUP (CPB): Free Stock Analysis
FLOWERS FOODS (FLO): Free Stock Analysis
J&J SNACK FOODS (JJSF): Free Stock Analysis
OMEGA PROTEIN (OME): Free Stock Analysis
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