Campbell Soup Co.(NYSE: CPB), the world's largest soupmaker, is scheduled to release its fiscal second-quarter 2010 financial results before the opening bell on Monday, February 22, 2010. Analysts, on average, expect the company to report earnings of 73 cents a share on re.venue of $2.24 billion. In the year ago period, the company posted earnings of 65 cents per share on revenue of $2.12 billion.Campbell Soup Company, together with its subsidiaries, engages in the manufacture and marketing of branded convenience food products worldwide. The company operates through four segments: U.S. Soup, Sauces, and Beverages; Baking and Snacking; International Soup, Sauces, and Beverages; and North America Foodservice. With a 69 percent share of the U.S. wet soup market, Campbell sells almost three billion cans of soup every year.
In the preceding fiscal-first quarter, the Camden, New Jersey-based company reported that its net income rose to $304 million or $0.87 per share, compared to $260 million or $0.70 per share in the year-ago quarter.On an adjusted basis, net income advanced 8% to $304 million from $281 million in the comparable quarter of the previous year. Adjusted per share earnings grew 14% to $0.87 from $0.76 per share in the three months ended November 2, 2008. Revenue declined 2% to $2.20 billion from $2.25 billion in the previous year. Analysts, on average, expected the company to post earnings of $0.81 per share on revenue of $2.28 billion. Campbell's gross margin was 41.9%, compared to 38.7% a year ago, primarily due to productivity improvements and pricing, net of promotional spending, in excess of cost inflation.
Recently, Campbell Soup Co. slashed its guidance for 2010 sales growth to a range of 2.5% to 3.5% from a range of 4% to 5%. Based on 2009 revenue of $7.6 billion, that implies sales of about $7.79 billion to $7.87 billion. The company said it still expects adjusted earnings before interest and taxes to increase between 6% and 7% and adjusted earnings per share to rise between 9% and 11% from $2.21 a share in 2009. It also announced a comprehensive plan to boost the performance of its condensed soup portfolio in the United States, a business that generated more than $1 billion in net sales in fiscal 2009. Campbell plans to enhance more than 60 percent of its condensed line with product improvements, further sodium reduction, more contemporary packaging, improved shelving systems and new marketing aimed at the simple meals category.
The moves are part of the company's effort to maintain its dominant position in the soup market and regain market share from rivals like General Mills Inc.'s Progresso and ConAgra Foods Inc.'s Healthy Choice. In a report last month, research firm Mintel International said Campbell's sales to stores other than Wal-Mart fell 2.2 percent from 2008 to 2009 as some shoppers switched to cheaper store brands. Campbell is still the largest player in the soup market, accounting for 47 percent of sales. President and CEO Douglas Conant said in a statement that the company plans to get more aggressive on the positioning of its ready-to-serve products. To that end, Campbell plans to roll out a new advertising campaign that show consumers how soup and dishes made with soup can be a "simple meal." The changes are to show up in August.
The company continued to grow in the economic downturn by focusing on the health trend, capitalizing on the rise in packed lunch occasions, and preparing to build its business in emerging markets. Like other packaged foods companies, Campbell Soup has benefited as consumers saved money by eating at home more often.The soupmaker is also poised to benefit from an uptick in consumer spending and a particularly cold U.S. winter season.
The company's stock currently trades at a forward P/E (fye 02-Aug-11) of 12.74 and PEG Ratio (5 yr expected) of 1.47. In terms of stock performance, Campbell Soup shares have gained 11 percent over the past year.
Full Disclosure: None.
