Campbell Soup ends the fiscal year with market-beating earnings

Posted Sep 12th 2009 12:10PM by Steven Mallas
Filed under: Earnings Reports, Campbell Soup (CPB), Kellogg Co (K), Procter and Gamble (PG), Kraft Foods'A' (KFT)

Campbell Soup (NYSE: CPB), a familiar name at the supermarket, reported Q4 earnings on Friday. The top line wasn't so hot as sales declined 11%. There were a few factors to consider with that decline, including currency translation and the issue of there being an extra week in the previous year's comparable quarter. I'm pretty satisfied with the context management provided for the challenged revenue. Also, sales essentially matched expectations, according to our earnings preview, which isn't so bad. The bottom line, however, deserves more than a passing grade. Adjusted earnings per share from continuing operations increased 15% to 30 cents, beating estimates by four pennies.

I like it. Furthermore, I enjoyed that adjusted per-share profit for the full fiscal year also beat forecasts. And you should take a look at the adjusted gross margin for both the quarter and the 12-month period. Campbell's management was able to expand the metric, a feat indicative of efficiencies and pricing strategies, according to the press release.

My read of this report tells me that Campbell is doing quite all right for itself. I haven't been a big bull on the company and/or stock, but after seeing the latest data, I am beginning to change my opinion. I've always thought the business might be good for long-term holders. I was more concerned with the trading implications. Of course, Campbell probably isn't the best buy-and-then-quickly-sell vehicle out there. It's a company better suited for those who want to own valuable brands that pay dividends. Think Kraft (NYSE: KFT), Kellogg (NYSE: K), and Procter & Gamble (NYSE: PG).

So my opinion is that Campbell did a good job. What did the market think? At the end of yesterday's trading session, shares of Campbell gained a single, solitary penny of value. Yep, that's right: Wall Street actually thought that higher profits and better margins weren't worth a whole lot. Perhaps the rally is getting tired.

Whatever. Shareholders of Campbell should feel good about their company's annual earnings. Hold for the long haul, and keep reinvesting those dividends. Such a strategy should hopefully pay off years from now.

Disclosure: I don't own any company mentioned; positions can change without notice.

Tags: campbell soup, CPB, dividend investing, dividend stocks, dividends, food, inthenews, K, kellogg, KFT, Kraft, PG, procter and gamble, supermarket