Campbell sees profit at upper end of forecast
Campbell Soup Co (CPB.N: Quote, Profile, Research, Stock Buzz) on Monday said it expected to report fiscal-year profit at the upper end of its forecast range and announced a $1.2 billion stock buyback, sending its shares up nearly 6 percent.
The forecast was a relief for Campbell investors. The shares have suffered in recent weeks as the company reported a decline in U.S. soup sales and concerns over soaring commodity costs hit food stocks.
At Friday’s close, Campbell shares had lost more than 10 percent of their value since the largest U.S. soup maker reported the drop in U.S. sales in its quarterly earnings report on May 19.
“How things had been going had implied that getting to the high end of that range was going to be tough to do,” Edward Jones food analyst Matt Arnold said. “Their guidance implies that things had gotten a bit better.
The company estimated earnings for the fiscal year ending August 3 to show an increase around the upper end of a 5 percent to 7 percent range from the adjusted $1.95 per share it reported for fiscal 2007.
That forecast range is equal to $2.05 to $2.10 a share fast cash. Analysts on average were expecting $2.04, according to Reuters Estimates.
Campbell’s soup sales have fallen as the company raised prices to offset soaring commodity costs. It was also pressured by General Mills Inc’s (GIS.N: Quote, Profile, Research, Stock Buzz) Progresso brand, which promoted a line of “light” soups endorsed by Weight Watchers International Inc (WTW.N: Quote, Profile, Research, Stock Buzz).
Campbell, which is meeting with analysts and investors on Tuesday, did not say what had improved since the middle of May, although even at that time it said earnings would be within its forecast range for the year.