Back when we stalked the Earth in fur unitards, hot soup meant a lot of killing, cutting, and cooking. A century ago, Campbell
As I remarked on Friday, convenience is one way to make up for soggy sales in the food business. Campbell is counting on a new generation of products that cut valuable seconds out of the heat-and-eat process. Last November, the famous soup giant was scrambling to meet demand for its new microwaveable bowls of Select Soups and the soda-can inspired, sippable "Soup at Hand" line.
For Q2 of 2004, sales volume of those familiar red-and-white cans was down, though price increases kept revenues flat. Luckily, ready-serve soup sales jumped 17% in both dollars and shipments. And, despite the Atkins craze, Campbell's carb-loaded biscuits and confectionery unit, its second-largest source of revenue, saw 13% sales growth.
Investors will want to cast a wary eye on the 9% rise in net sales -- to $2.1 billion -- that's being trumpeted in the headlines today. The dropping dollar contributed 5% of the bump, and price increases added another 2%. Currency fluctuations and price hikes do not make for the healthiest top-line growth.
At the bottom line, Q2 earnings amounted to $0.57 a share, a penny more than last year. That's nothing to write home about, but earnings are up 5% through the first six months of the fiscal year, to $1.08 -- not accounting for a goodwill impairment charge taken last year.
Estimates put 2004's earnings around $1.58. That represents a modest 4% jump over 2003 (unless you back out the abovementioned charge, in which case the estimates represent a 1.3% drop).
At around $27.50 per share, the firm trades near its 52-week high, sporting a price-to-earnings ratio of 17.5. That's similar to the P/Es of peers such as Progresso's parent General Mills
Food fans looking for value and dividends may want to check out Motley Fool Income Investor .
Fool Contributor Seth Jayson owns cans of Campbell's Soup, but no shares of any company mentioned above.
