|Forecasts | | | | | |
| | |2009A |2010F |2011F |2013F |
|BV Per Share |$ |2.07 |3.62 |3.58 |3.19 |
|Total Debt/ Equity |% |3.60 |2.26 |2.21 |2.50 |
|ROE |% |1.09 |0.64 |0.67 |0.78 |
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Resilient earnings in distressed times
Despite the economic downturn, the results of FY2009 were pleasantly surprising for Campbell’s – their adjusted sales grew from $8M to $8.24M (3% growth) while k earnings increased by 3.8% to (EPS of 2.26) Net Earnings of $794M. With their push to streamline their products into their 3 core segments (Simple Meals, Baked Snacks and Healthy Beverages), their dominance in the soup market, and the possible trade down effect that encouraged consumers to prepare more home-cooked meals, Campbell’s managed to weather the tough times and gain respectable results over the past financial year.
Focused on Innovation and Emerging Markets
As the company announced at its F2010 investor day, Campbell’s aims to capitalize on the growing consumer concern over health and wellness through product innovations which include higher margin “light” condensed soup varieties and reduced sodium tomato soup. It also plans to restage its Chunky line of soups and expand its healthy Select Harvest offerings. Moreover, while return from investments into Russia and China are expected to materialize only in F2014, Campbell’s plans to continue its expansion into these two key markets in F2010 as it did since the mid 2000’s. We believe that these initiatives will help spur future earnings and sales growth for the company.
Key Risks
Recently, Campbell’s has posted volume declines in its US Soup, Sauces and Beverage segment as private label market share increased. The company has also been lagging behind General Mills in terms of market share. Campbell’s new product...