What synergies will peers’ acquisitions bring?
Campbell Soup Company (NYSE:CPB)has acquired Kelsen Group, a producer of baked snacks. Kelsen’s products are sold in 85 countries around the world, with sales of $180 million in fiscal year 2012. The sweet biscuit market in China and Hong Kong is growing at a faster pace than the global average. Campbell Soup Company (NYSE:CPB) is well positioned to take advantage of this growth because Kelsen is the market leader in both China and Hong Kong. The acquisition is expected to boost revenues for Campbell Soup Company (NYSE:CPB), and eventually enhance its profitability.
Campbell Soup Company (NYSE:CPB)’s management plans to strengthen the company’s core business and expand its operations into higher-growth areas. This plan will help the company expand its international presence and improve its profitability by diversifying its revenue base.
ConAgra Foods, Inc. (NYSE:CAG), another player in the market, acquired Ralcorp Holdings at the beginning of the year. ConAgra Foods, Inc. (NYSE:CAG) now projects that the acquisition will help drive double-digit EPS growth until 2017. ConAgra’s EPS in the fourth quarter of fiscal year 2013 was up by 18% on a year-over-year basis. The company’s projected EPS for fiscal year 2014 is $2.40, which represents approximately 11% comparable growth. The company’s per-share earnings are expected to grow at a 10% rate from 2015 to 2017.
Final takeaway
TreeHouse’s improved sales and operating margins have strengthened its financial position, which suggests future profit growth. The company’s acquisitions are expected to add further to EPS, which could also lead to higher profitability. Based on these expectations, the stock seems to be a good buy.
Campbell Soup Company (NYSE:CPB)’s revenues in the third quarter of fiscal year 2013 have increased by 13%, and its earnings per share increased by 3.5% on a year-over-year basis. The Kelsen acquisition will also significantly increase Campbell Soup’s revenues. Campbell Soup Company (NYSE:CPB)’s dividend has been constantly increasing; its dividend increased at a CAGR of 5.7% over the last five years. Therefore, the company’s future prospects look bright.
ConAgra Foods, Inc. (NYSE:CAG)’s strong current position, as well as the EPS growth expectations for ConAgra Foods, Inc. (NYSE:CAG), suggest handsome future earnings.
The article 3 Food Companies That Could Boost Your Portfolio Returns originally appeared on Fool.com is written by usman iftikhar.
Fool contributor Usman Iftikhar has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
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