The world's top soup maker, Campbell Soup
A look at the numbers
Revenues in the quarter rose slightly to $1.81 billion from $1.80 billion in the year-ago quarter. The rise in revenues, although negligible, was mainly due to the strong performance of its baking and snacking segment (which includes Pepperidge Farm), where sales went up by 10% from a year ago.
Despite flat overall sales, net income rose by 11% compared with the same quarter last year. The earnings gain was fueled by lower marketing and selling expenses and favorable foreign exchange rates. Cash flow from operations for the first nine months of its fiscal year stood at $858 million. This robust figure should enable the company to go forward with its plans for increased innovation in the beverage and soup segments.
Areas of concern
U.S. soup revenues declined by 7%. Campbell sells about 2 million cans a year and still enjoys the highest market share in the nation -- about 60%. However, the company has struggled lately as demand for soup has fallen.
Strong competition from the likes of Progresso by General Mills
Inflation could be a concern as well. Higher commodity costs are threatening to escalate into a major economic issue globally, and industry leaders such as PepsiCo
The Foolish bottom line
The company has predicted that sales this year would show a marginal increase of about 1%. But Campbell also predicts that its year-end earnings per share will fall by around 1% to 3% from its $2.47 showing in fiscal 2010. If you're a shareholder, it's best to remain cautious, at least for the time being.
Fool contributor Shubh Datta doesn't own any shares in the companies mentioned above. The Motley Fool owns shares of PepsiCo, and Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in PepsiCo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.