Campbell Soup (CPB) and its Transformation and Driving Quality Growth plans are improving the top-line through a combination of improved products, attractive packaging, a new retail shelving system, and more effective marketing. Price increases and a line of lower sodium soups helped Campbell Soup accomplish management's financial goals in the last two fiscal years.
Management continues to optimize the portfolio with the introduction and reformulation of lower sodium soups. However, rising cost inflation and flat sales in the high margin condensed soup business are concerns. The Hold recommendation is maintained.
With its strong soup franchise and high but slowly eroding gross margins, Campbell Soup's stock should trade in a P/E multiple range of 17 to 23. The target price of $40.25 is 20 times 12-month trailing EPS.
Read the full analyst report on CPB
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