We reiterate our Underperform stance on the high-quality foods
and simple meals manufacturer,
Campbell Soup Company
) as the company posted disappointing first-quarter fiscal 2014
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CAMPBELL SOUP (CPB): Free Stock Analysis
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Campbell's first-quarter fiscal 2014 results suffered due to the
late Thanksgiving holiday, weakness in core business categories,
higher marketing expenses and recall of Plum Organics pouch
products. The company's bottom-line results declined 21% year
over year to 66 cents per share, while it was much lower than the
Zacks Consensus Estimate of 87 cents per share.
Net sales fell 2% to $2,165 million from the prior-year quarter
and missed the Zacks Consensus Estimate of $2,307 million.
Further, the company's future looks gloomy given its lowered
sales and earnings growth guidance and lack of any catalyst. The
company now expects sales to increase by 4%-5% versus 5%-6%
forecasted earlier. Adjusted earnings growth guidance range was
trimmed to 2%-4% from 3%-5% projected earlier. Fiscal 2014
earnings are expected to range between $2.53 and $2.58 per share.
The company's lowered guidance hurt investor sentiments,
triggering a downward movement in the Zacks Consensus Estimate
for fiscal 2014 and 2015, which moved down 3.8% and 3.3%,
respectively, in the last 60 days.
Moreover, Campbell continues to be affected by the sluggish
growth and slowdown in consumption witnessed in the North
American food industry over the last few quarters. The food
industry is witnessing changes in consumer preferences (for
example, toward health and wellness products) as well as spending
shift toward economic products.
Further, rising commodity prices, intense competition and
exposure to unfavorable foreign currency fluctuations may
undermine the company's future performance.
Other Stocks to Consider
Currently, Campbell has a Zacks Rank #4 (Sell). Some
better-ranked stocks in the food industry include
ConAgra Foods Inc.
The Hain Celestial Group Inc.
Green Mountain Coffee Roasters Inc.
). All these stocks carry a Zacks Rank #2 (Buy).