Last week, I previewed Campbell Soup's (CPB -0.54%) critical second-quarter earnings report.

What made this quarter more critical than others? Well, while many packaged food companies have stalled recently, Campbell's first-quarter earnings declined a whopping 30%. In comparison, competitors like General Mills (GIS -0.22%) and Kellogg (K -0.93%) showed modest declines; General Mills earnings dropped 3.5%, and Kellogg saw sales slip 2%, so Campbell's woes were in a different league.

This quarter was worth watching to make sure that Campbell's business wasn't systemically declining. Here's where Campbell stacks up against General Mills and Kellogg today.

Image courtesy of Campbell Soup

Controlled marketing costs lead the way to a solid Q2
One of the most troubling aspects of Campbell's first quarter was the fact that marketing costs rose 14%, even as sales slipped. The company was definitely able to turn the quarter in both respects. Not only did Campbell beat EPS expectations handily, sales for the quarter increased 6%, and most importantly, marketing costs actually declined 3%.

Whenever you listen to a call after a poor earnings report, it's tough to determine if executives are making excuses or just telling the truth! Campbell's management team told us in Q1 that the increased marketing costs were due to investments in Plum Organics and Bolthouse Farms, rather than any products losing appeal. 

With a quarter of strong (3%) organic sales growth in the books along with a drop in marketing costs, that story is a bit easier to digest. 

Image courtesy of Campbell Soup

Cold weather's impact on soup sales? Mmm Mmm Good.
One thing I was definitely watching for this quarter was a rebound in soup sales. Campbell's soup and simple meals had been in a rut, and it looks like the "polar vortex" that has swept most of the U.S. was just what they needed.

U.S. simple meals sales (of which soup is 35%) jumped 7% thanks, in-part, to frosty weather in North America. While Progresso Soup maker General Mills has not yet reported, the impression was that the cold weather drove soup sales, thus it's difficult to buy Campbell over General Mills now on these results alone.

For current shareholders of Campbell however, this rebound was a good sign. 

Good signs for acquisitions, investments, and snacking
Campbell's acquisition of organic food Plum Organics finally paid off in the second-quarter. After a recall hampered Q1 results, Plum contributed to 2% of the growth in the simple meals division, and 8% of the gains in the sauce division. Further, Campbell saw continued strides from new veggie brand Bolthouse Farms, and its acquisition of the international snack food brand Kelsen Group paid enormous dividends this quarter. Kelsen added 16% to the snacking division growth, which saw its sales soar 14% overall.

Campbell's snacking division and its "healthy" brands are starting to seem like two decent reasons to buy this stock over its competitors. 

Neither Kellogg nor General Mills, for instance, have made the organic or veggie investments that Campbell has. With organic retail penetration growing at nearly 20%, even as it makes up less than 5% of current grocery sales, this could be a huge area of growth for Campbell. As for snacks, it appears Campbell is simply executing better than the competition.

In Kellogg's most recent quarter, sales were a drag on earnings, yet they've been Campbell's biggest bright spot for two straight quarters.

So should you buy Campbell Soup?
It's really tough to evaluate large conglomerates like Campbell Soup, Kellogg, or General Mills. At any given time, something is going wrong within their businesses, because they're simply so big.

Here's an example. Campbell knocked it out of the park this quarter, earnings grew 19% and it fixed almost every "ill" of its previous (bad) quarter, yet a new issue arose as beverage sales declined 3% on weakness in V8. The safety that is provided in brand diversification also makes it very difficult for these companies to grow "together" measurably. 

I said I'd be watching for Campbell's organics and acquisitions to pay-off, marketing costs to decline, and soup to rebound, it did all of that. With the stabilization in soup and marketing costs, the dividend should be safe, and that should keep many investors on board. 

I don't think this is a "buy at any price" business. Yet with growth catalysts in Plum Organics and Kelsen, I think Campbell has the most upside of this group. I'm worried about Kellogg's cereal and snaking slump, despite its low P/E, I'd skip it. Even though they're "pricier" I still like Campbell and General Mills for your watch list. 

Choose Campbell (on a pull back) if you want a little more spice, General Mills if you like it bland, and put Kellogg back on the shelf for now.