Campbell (NYSE:CPB) Soup Company’s recent ups and downs
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Campbell (NYSE:CPB) Soup Company for the past few years has been struggling very hard to produce and increase its revenue and earnings growth. The consumer appetite trends continue to change towards fresh alternatives like organic foods from shelf stable goods and canned food. Moreover, the Campbell (NYSE:CPB) Soup Company has joined the organic market at a very later time period which makes it very difficult for it to penetrate the market.
This has led to lesser gains in shares and the investors also seem to be unhappy regarding the dividend. The company’s shares only increased by 2% since last year which is 12% lower than the expected returns. The things however got somewhat better when the tides seemed to turn a little when the company beat the expected profit margin in the first quarter results but still it is not sufficient to change the company’s faltering reputation. Keeping in mind the company’s recent performance, the top management has changed its profit standard expectations as well.
The shareholders on the other hand, should be aware about the company’s low income growth rate. According to Campbell (NYSE:CPB)’s reports, the company made sales of $2.25Billion while adjusted earnings of $0.47 per share. The earnings per share and sales grew by 4% to 12% respectively in each coming year. The fast food segment saw little boost because of the Thanksgiving Holiday which caused an increase in the sales of pasta, canned chicken food, and soups. The company only made some good sales for short period of time because of the Thanksgiving event; therefore the investors should keep low expectations for the next quarter sales. The decreased sales rate of company forced its management to adopt the cost cutting strategy through which they were able to make some profit in the last quarter. However, the company’s pasta and soup which are its core products provide enough revenue to at least pay the dividends to the stock holders.
The paid dividend of Campbell (NYSE:CPB) only accounts for 44% of whole year earnings per share. The experts however are expecting future sales growth to be very modest and urge the investors to adjust the expectations according to the circumstances. The company for the past few years wanted to penetrate the market by using big push strategy through which it introduced foods of organic category. This new strategy of the company led to the company’s acquisition of some new brands of Kelsen, Plum organics and bolt house farms. These brands currently account for the company’s portfolio. According to the Company, it increased its focus on the well being and health of its consumers through this new acquisition. However, it is difficult to see how much these acquisitions have improved company’s bottom line. The investors will continue to get the dividend but they should lose any hopes of earning immediate and large profits. The reason is that in general, these brands have indeed emerged as successful but in reality they are not large enough to feed the whole company.