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 Soup's consistent positive
earnings surprise trend, strong revenue growth and optimistic
guidance. However, rising commodity costs remain a matter of
From its earnings surprise history, we see that Campbell Soup
has beaten the Zacks Consensus Estimate 18 times in the past 21
quarters, with an average positive surprise of 6.1%.
The recently posted adjusted earnings of 45 cents per share
for fourth-quarter fiscal 2013 beat the Zacks Consensus Estimate
of 42 cents, consequently resulting in a surprise of 10.7%.
Moreover, quarterly earnings rose nearly 10% year over year,
primarily driven by a 13% rise in the top line.
Buoyed by strong quarterly results, the company provided an
impressive guidance for fiscal 2014 with sales from continuing
operations projected to increase by 5%-6% and adjusted earnings
per share to rise by 3%-5% year over year.
Apart from strong fourth-quarter results, Campbell Soup's
growth prospects appear promising. We believe that the company's
prudent investment and strategic initiatives toward product
innovation and brand building will increase its customer base and
profitability. Furthermore, Campbell Soup's focus on improving
the North American soup and simple meal business as well as
expanding overseas operations bode well for future growth.
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 Campbell Soup's business include
tomato paste, grains, beef, poultry, vegetables, steel, glass,
paper and resin. Significantly, many of these items are subject
to price fluctuations.
Further, Campbell Soup 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 Soup's market share, and
consequently its top and bottom-line performances.
Other Stocks Worth Considering
Currently, Campbell Soup holds a Zacks Rank #4 (Sell).
However, other stocks that are worth a look in the food industry
Boulder Brands, Inc.
Dole Food Company Inc.
Kraft Foods Group, Inc.
). All of these carry a Zacks Rank #2 (Buy).
BOULDER BRANDS (BDBD): Free Stock Analysis
CAMPBELL SOUP (CPB): Free Stock Analysis
DOLE FOOD CO (DOLE): Free Stock Analysis
KRAFT FOODS GRP (KRFT): Free Stock Analysis
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