Improved sales led to a 15.2% jump in revenue for this company during the most-recent quarter.
A new strategic plan has delivered a company focused on canned soups, pasta and V8 vegetable juices which plays to its strengths. We think the firm will continue to find savings and deliver continued share price growth as a top value pick.
Meanwhile, the stock trades at 19.0 times the company’s 2023 earnings forecast.
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CAMPBELL SOUP CO. (New York symbol CPB; www.campbellsoupcompany.com) last raised your quarterly dividend with the February 2021 payment. Investors now receive $0.37 a share, up 5.7% from $0.35. The new annual rate of $1.48 yields a solid 2.6%.
Under its new strategic plan, which began in 2018, Campbell sold most of its international and refrigerated-foods businesses. That let it focus on canned soups, pasta and V8 vegetable juices. Campbell also kept its snack food operations. They were significantly expanded in March 2018 when the company paid $6.1 billion for snack-foods maker Snyder’s-Lance.
Campbell continues to raise its selling prices to offset higher costs for food ingredients and labour.
In the fiscal 2023 first quarter, ended October 30, 2022, sales rose 15.2%, to $2.58 billion from $2.24 billion a year earlier. That topped the consensus forecast of $2.44 billion. Higher prices (up 16%) offset a 1% decline in volumes.
The company’s earnings before one-time items in the quarter also gained 14.6%, to $1.02 a share from $0.89. That too beat the consensus estimate of $0.87.
Value Stocks: Savings should continue to add to the bottom line
The foodmaker continues to find savings in the wake of it Snyder’s-Lance acquisition. So far, it has reduced annual costs for its continuing businesses by $860 million. Those yearly savings should reach $1 billion by the end of fiscal 2025.
Campbell now expects its sales for all of fiscal 2023 to improve by 7% to 9%. That’s up from its earlier forecast for 4% to 6% growth. The higher sales will also lift its full-year earnings between 2% and 5%, to between $2.90 and $3.00 a share. The stock trades at 19.0 times the midpoint of that range. That’s a reasonable multiple considering the company’s strong brands and market share.
Campbell Soup’s dividend has now grown an average 1.1% annually over the last 5 years. Its TSI Dividend Sustainability Rating is Above Average.
Recommendation in Dividend Advisor: Campbell Soup Co. is a buy.