In my slightly tilted world, soup is one of the greatest culinary creations of all time. I would have to put it right up there with the peanut butter-and-jelly sandwich and meatballs and spaghetti. You can throw just about anything into a good soup and let the blending of ingredients produce a magical result.
There was very little magic in Campbell Soup's
Campbell's fourth-quarter net sales declined 2%, as the quarter was one week shorter than last year. If you want to compare "apples to apples," then the fourth-quarter sales would have been up 5% if the time periods were the same. Earnings (before restructuring charges) were $0.17 per share, which was a penny below both the analysts' consensus estimate and last year's results. Earnings for fiscal 2004 were right on target at $1.58 per share, aided by double-digit international soup and sauces sales growth; strong sales gains were produced in France, Belgium, and the Asia Pacific region, which offset declines in the U.K. and Germany.
The CEO mentioned "strong" fourth-quarter sales and "good momentum" as the company enters a new fiscal year. The fact is that Campbell's has been treading tomato soup for a few quarters now, and investors appear to be a bit restless. The shares have dropped nearly 10% since March and appear to lack any momentum, which would have to be sparked by a corporate catalyst. Management expects an earnings increase of 5% to 7% for fiscal 2005, which would put earnings at about $1.66 to $1.69.
With companies such as Heinz
The Campbell shares, which are trading at nearly 16 times the projected fiscal 2005 earnings estimate of $1.67 per share, appear to be a little bloated relative to the company's 6% expected earnings growth rate. The balancing variables leveling the fairly valued shares are the company's 2.44% dividend yield, its healthy $744 million cash flow, and its tremendous brand-name recognition.
Grab a spoon and warm your insides with these other opinions:
Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.