Campbell's Soup Didn't Impress Market with Q2 Report

The volume and mix metric didn't pull its weight in Q2, as it subtracted 2% from the revenue picture. Pricing strategies, however, did help out, as did a more favorable currency environment.

Gross margin saw an expansion. It was driven by advances in productivity initiatives. In terms of marketing expenditures, they benefited in part from a cheaper environment in the advertising sector (media companies might not want to hear that, but it's interesting to note that the tough times in one arena can benefit businesses operating in a different sector).

Operational cash flow increased 19% over the six-month frame. Management was gracious enough to repurchase 7 million shares. It's good to witness a little confidence in the business.

Campbell isn't selling off in a huge way, which is understandable. While the quarter may have been lackluster in some respects, it certainly wasn't a disaster. The shares and fundamentals of this business might not be the dream of momentum players, but they nevertheless will be useful for patient holders.

Execs will need to focus on U.S. soups in upcoming quarters, as Campbell is famous for its broth business. Increasing advertising activities is one response to the problem, of course, but if the company does that, it will have to make certain that the spending is allocated in a smart manner; getting as much return as possible from any campaign isn't always easy, and value is oftentimes hard to come by. If advertising rates remain economically advantageous, then now is the time to go for a big push in the category.

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