Campbell Soup Company (CPB) reached a new 52-week high of $47.45 on Thursday, Jan 22. This Zacks Rank #3 (Hold) manufacturer of branded convenience food products eventually closed trade a notch lower at $47.43, representing healthy year-over-year growth of 13.3%. Average volume of shares traded over the last three months stands at over 1,069k.
Moreover, Campbell currently trades at a forward P/E of 19.2x, in line with its peer group average. The estimated long-term earnings per share growth rate stands at 10.0%, way above the 4.3% growth expected for the peer group.
The investor community is impressed with the company’s strategic focus on enhancing top line and boosting return on investment through the stabilization of North American soup and simple meal business, overseas expansion as well as growth of the healthy beverages and baked snacks businesses. This aspect has also helped the stock to gain momentum, pushing it to a new high.
Moreover, we believe that Campbell’s prudent investment and strategic efforts toward product innovation and brand building will lead to an increase in its customer base and profitability.
The company has also taken up acquisitions and joint ventures in order to enhance its brand portfolio and accelerate future growth. As a result, the company acquired three new growth engines in fiscal 2014, including Bolthouse Farms, Plum Organics and the Kelsen Group, which provide for combined annual sales of nearly $1 billion.
Notable joint ventures in which the company has recently entered include Grupo Jumex and Conservas La Costena in Mexico, which have enhanced the company’s manufacturing and distribution capabilities along with its presence in the global market.
Additionally, we remain optimistic about the company’s decision to step away from its troubled canned soup business and focus on capturing the packaged fresh food market in order to cater to the demands of its customers and keep up with the current trends.
We are also impressed with Campbell’s robust first-quarter fiscal 2015 results, wherein both top and bottom lines improved year over year and beat the Zacks Consensus Estimate.
The company’s adjusted earnings of 74 cents per share grew 12% year over year and came a penny ahead of the Zacks Consensus Estimate mainly benefiting from strong revenue growth along with its brand expansion and cost containment strategies. Net sales increased 4% to $2,255 million and surpassed the Zacks Consensus Estimate of $2,222 million.
Other than Campbell, The Clorox Co. (CLX), Church & Dwight Co. Inc. (CHD) and Dean Foods Co. (DF) also hit new 52-Week Highs of $110.16, $83.40 and $19.74, respectively, on Jan 22.
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