Shares of Campbell Soup Company CPB attained a new 52-week high of $49.16 yesterday and eventually closed trade at $47.65. The momentum seen yesterday was mainly driven by its acquisition of leading refrigerated salsa maker, Garden Fresh Gourmet.
The acquisition is in line with the company’s initiative to expand its packaged fresh and organic foods categories. As the products of Garden Fresh Gourmet complement Campbell’s Bolthouse Farms portfolio, this will give the latter a scope to further enhance its deli offering.
Moreover, this manufacturer of branded convenience food products has been gaining strength from its strategic endeavors, which led the stock to surge roughly 8.3% year-to-date.
The company’s portfolio realignment initiative, adopted to generate cost savings, is quite impressive. Campbell Soup has decided to realign its reporting segments from five to three with a view to synchronize its organizational structure and key growth strategies. This streamlining is likely to enhance overall execution, leading to innovations and ultimately improve financial results.
Moreover, the company has made acquisitions and formed joint ventures in order to enhance its brand portfolio and accelerate future growth. This acquisition of Garden Fresh Gourmet marks Campbell’s third venture into the fresh and organic foods line over the past few years. The company commenced the strategy of building upon these categories with the acquisition of Bolthouse Farms in 2012, followed by Plum Organics in 2013. Another acquisition made to boost overall business growth was that of the biscuit company Kelsen in 2013.
Apart from these, the company’s positive earnings streak and upbeat earnings outlook for fiscal 2015 also provided support to the stock. In the trailing three quarters, the company has outperformed the Zacks Consensus Estimate by 8.2%, including 21.6% in the last concluded quarter.
Despite currency headwinds, Campbell Soup posted better-than-expected third-quarter fiscal 2015 results, wherein adjusted earnings of 62 cents per share came ahead of the Zacks Consensus Estimate of 51 cents.
Considering the above factors, we remain optimistic about the company’s future performance, which is reflected in its Zacks Rank #2 (Buy).
Apart from Campbell, ConAgra Foods Inc. CAG, Coty Inc. COTY and Rollins Inc. ROL also hit 52-Week Highs of $44.31, $32.62 and $29.00, respectively, on Jun 30.
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