Campbell's Cuts Sales Outlook - Analyst Blog

Soup giant Campbell Soup Co. (CPB) lowered its outlook for fiscal 2011 anticipating weak first-quarter 2011 results. The company noted that in spite of higher levels of spending on promotion, purchases of its soup by U.S. consumers remained lackluster. The sluggish economic conditions and an intensely competitive pricing environment added to its woes.

For the first quarter of fiscal 2011, the company expects net sales to fall by 1.0%. As a consequence, the company now sees operating income and earnings per share to decrease by 7% and 6%, respectively.  

For fiscal 2011, Campbell expects the topline to increase by 1%–3%, breaching its earlier guidance of 2%–3% growth. As a comparison, the company posted a 1% sales growth in fiscal 2010.

Campbell now expects to grow its fiscal 2011 earnings in the range of 2%–4% over an adjusted base of $2.47 earned in fiscal 2010. This comes in below the previous guidance range of 5%–7% growth.

Zacks Consensus Estimate

For the first quarter of fiscal 2011, the Zacks Consensus Estimate is 89 cents a share. For the full year, the Zacks Consensus Estimate is currently pegged at $2.63 per share. The company believes that for the rest of the year better promotional strategies and cost-control initiatives would lead to stronger results.

Campbell's shares maintain a Zacks #3 Rank, which translates into a short-term Hold recommendation. Our long-term recommendation for the stock remains Neutral.