Food producers have had a tough time this year combating rising input costs and waning demand. For Campbell Soup (NYSE: CPB), the situation has been no different. The world's top soup maker has seen its U.S. soup sales decline for five straight quarters as a result of changing tastes and increased competition from General Mills (NYSE: GIS) and ConAgra (NYSE: CAG).

The road ahead
Despite falling sales in its soup segment, Campbell's has managed to top expectations in its two most recent quarters. The better-than-expected performance has mainly resulted from the strength in its baking and snacking segment (which includes Pepperidge Farm).

Campbell's is currently undergoing a transformation as new CEO Denise Morrison takes the reins of the company. She plans to change the workings of the company in an effort to correct slumping sales and focus on those areas that have been performing well. Soup sales have fallen mainly because people's tastes have changed. Campbell's plans to launch 27 new soups by September, but it remains to be seen what effect this launch will have on the company's sales.

It also plans to bolster Prego and Pace sauces with new products to help drive sales. Also, Campbell's is now focusing more on tie-ups with Asian and Latin American companies in an attempt to grow internationally. Campbell's is currently in a transitional phase, and how these initiatives will pan out remains to be seen.

The price you're paying
Let's now take a look at how the company is valued when compared to its industry peers.

Company

Trailing P/E

Forward P/E

EV/EBITDA

1-Year Projected EPS Growth

Campbell's

12.9

13.0

7.8

(6.5%)

ConAgra

12.3

13.3

6.9

3.5%

General Mills

13.8

14.1

9.2

5.7%

H.J. Heinz (NYSE: HNZ)

16.9

14.8

10.5

8.4%

Source: Capital IQ, a division of Standard & Poor's.

Campbell's is trading more or less in line with its peers, but the thing to note here is that its earnings are estimated to decline by 6.5%. The company is currently in a transformative phase, and a turnaround may take some time. Add to that the pressures of rising input costs on its margins. For the time being, it is best to wait and watch.

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