Chicken-noodle-soup purveyor Campbell Soup (NYSE:CPB) is scheduled to report first-quarter earnings on Nov. 20. Here's a look at whether you can expect the numbers to be a rich gumbo or a thin broth.

What analysts say:

  • Buy, sell, or waffle? Seventeen analysts cover the company, 14 of whom label it a hold. Five say it's either a buy or a strong buy, and one says sell.

  • Revenues. On average, they expect revenues to be flat at $2.1 billion.

  • Earnings. Profits are forecast to rise a modest 5% over last year, coming in at $0.58 per share.

What management says:
The fourth quarter saw improvement across the board for Campbell. "For the year, our overall results were outstanding, consistent with our commitment to deliver quality growth," said CEO Douglas Conant. "Our top-line growth from continuing operations of 4 percent was at the upper end of our target range, and our earnings per share growth of 12 percent, on an adjusted basis, [was] well above our target. We continue to position our business for sustainable sales and earnings growth."

In the first quarter of last year, the company witnessed a 6% decline in total U.S. soup sales (which comprises around 45% of the company's total sales) as it changed its promotional activity. In 2004, the soup maker had heavily discounted its Campbell Chunky line, which in turn boosted sales. Is Campbell's preparing for another round of deep discounts this time around? Maybe. I loaded up on a case or two of Campbell Chunky at my local soup-ermarket (er, sorry!) just last night because it was selling at 50% off its regular price.

What management does:
The lack of discounts offered last year was evident as gross margins increased by 90 basis points to 41.9% for the 12 months ended in the most recent quarter over the same period the year before. As the table below relates, margins are fairly consistent. Net income did fall last quarter on charges related to the sale of some of its European businesses, though soup sales continued to be strong.

Margins % 07/05 10/05 01/06 04/06 07/06
Gross 41.0 40.9 41.2 41.2 41.9

Op.

 15.9 16.2 16.2 16.9 15.7
Net 10.0 10.3 10.5 10.6 10.4
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Analysts aren't expecting much from Campbell's this quarter. Estimating flat sales is akin to saying that actual sales will fall, since inflation would raise prices and currency fluctuations should inflate overseas sales. Yet I find the U.S. portion of the soup business has been pretty hale and hearty all along, as have beverage sales, like those of its V8 brand of drinks. Considering that new lines of convenience soups have been introduced and well received, it would seem that analyst expectations are a bit thin.

The company has also been buying back shares under an accelerated repurchase agreement it has with its lender. It's bought back $300 million worth of shares so far out of the company's total repurchase plan of $620 million. The soup purveyor also had its credit rating raised, allowing it to put itself on a firmer financial foundation. The winter months which make up the first and second quarters are, for obvious reasons, the strongest quarters for the company. They account for nearly 60% of Campbell's revenues for the full fiscal year, which means we might actually be in store for some bigger numbers than the analysts are giving the company credit for.

Soup's on!

Competitors:

  • Hershey (NYSE:HSY)
  • H.J. Heinz (NYSE:HNZ)
  • Kraft (NYSE:KFT)

Related Foolishness:

Heinz and Kraft are Motley Fool Income Investor recommendations. To see what other powerful dividend stocks the newsletter has selected, take a free 30-day trial today.

Fool contributor Rich Duprey does not own any of the stocks appearing in this article. The Fool has a disclosure policy.