Campbell seems to be piping hot. Gross margins increased, and the trends in sales volumes were positive. The company mentioned that price increases and productivity enhancements were helping in the war against inflationary onslaughts. Successfully dealing with increased input costs is key to the continued success of a consumer-products business, and it's something I like to see highlighted in an earnings report.
For those keeping score, credit goes to V8 beverages and Pepperidge Farm snacks for helping to drive the quarterly results -- those Goldfish crackers are still pretty darn popular, believe it or not. Campbell's Godiva Chocolatier segment also added to the top line, having scored double-digit increases in Asia. And, oh yeah, lest we forget, Campbell is, first and foremost, known for its canned soups -- U.S. broth sales jumped 10%. As can be seen, the company is keeping up with competitors Unilever
When I last covered Campbell back in November, I took a look at the cash flow characteristics over the last few years, and I found them to be rather interesting -- operational cash and free cash was on the rise. A look at the latest 10-Q shows that cash flow has been on the decline, but I'm not ready to bear out just yet. I think that both the company and its brands are improving and that the stock might make for an interesting investment idea.
Campbell Soup has come a long way from the dark days when growth was challenged and, more ominously, a dividend cut was enacted. Things have turned around, but I do have to point out that the balance sheet has weakened in a couple of respects -- long-term debt is up, while cash and equivalents are down (total debt, however, has decreased). You might do well with this soup purveyor in a buy-and-hold-dividend-reinvestment portfolio, but I'd wait for opportunities to get the stock at a higher yield.
Have another bowlful of tasty Takes:
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