CPB - Embedded Expectations Analysis - 2021 05 07
Campbell Soup Company (CPB:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 21.2x Uniform P/E. At these levels, the market is pricing in expectations for profitability to remain stable, but management may have concerns about their earnings growth, household retention, and their Meals & Beverages category market shareSpecifically, management may lack confidence in their ability to sustain Meals & Beverages market share and consumption growth, generate significant free cash flow, and continue to improve EBIT and EPS. Moreover, they may have concerns about the impact of continued foodservice weakness on their net sales, their recent migration from Oracle to SAP, and demand sustainability among old and new households, particularly in the Meals & Beverages category. Furthermore, they may lack confidence in their ability to maintain high household retention rates for condensed soups, continue surpassing growth expectations for Pacific Foods, and further develop their supply chain productivity program. Additionally, management may be overstating the progress of their “Win in Soup” strategy, and they may be concerned about Goldfish brand engagement and the impact of rising labor absenteeism. Finally, management may lack confidence in their ability to capitalize on at-home consumption trends, further strengthen their liquidity position, and better control
promotional and operational spending
Campbell Soup is a manufacturer and marketer of food and beverage products. The company's reportable segments are: Meals and Beverages, which includes the retail and foodservice businesses in the United States and Canada, and the meals and shelf-stable beverages business in Latin America; Snacks, which consists of Pepperidge Farm cookies, crackers, fresh bakery and frozen products in United States retail, including Milano cookies and Goldfish crackers, and Snyder's of Hanover pretzels, Lance sandwich crackers, Cape Cod and Kettle Brand potato chips, Late July snacks, Snack Factory Pretzel Crisps, Pop Secret popcorn, Emerald nuts, and other snacking products in the United States and Canada.
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