Campbell Soup Co. to report Q3 earnings, covering end of soup season

Earnings Preview: Campbell Soup Co.

TRENTON, N.J. — Campbell Soup Co., the world’s largest soup maker, reports its fourth-quarter and year-end results before the market opens Friday.

WHAT TO WATCH FOR: The big issue for Campbell is almost always how well its condensed soups, which are the company’s most famous product and one that delivers high profit margins, are doing.

The products have had a bumpy run. Through much of 2009, the problem was high inflation for ingredients. Expenses have stabilized, but all the condensed soup woes aren’t over. In the third quarter of 2010, the company sold more of it than a year earlier — but that was more than offset by heavy promotions on the soup.

The fourth quarter, which includes much of the summer, is slow soup season, so the numbers are usually seen as less important than results for other quarters.

Analysts will also look for signs of whether Campbell might be looking to buy any other companies. The Sunday Times of London reported last month that the company was considering buying the biscuit unit of the British firm United Biscuit, a move that would be consistent with its position that it would be willing to acquire firms.

WHY IT MATTERS: The long-term success of Campbell is closely tied to its condensed soup.

While the company is trying to expand its offerings in China and Russia and introducing a new line of teas, Wall Street is mostly concerned with how well condensed soup is selling because so much of the company’s profit comes from it.

How well condensed is selling shows where consumers rank soup among their easy-to-make meals and whether they’re willing to try lower-cost store brands in place of the longtime pantry staple.

WHAT’S EXPECTED: Analysts surveyed by Thomson Reuters expect Campbell to report earning 31 cents per share on sales of $1.6 billion.

LAST YEAR’S QUARTER: Campbell reported and adjusted profit of 30 cents per share on sales of $1.53 billion.