Great companies share one key trait: They can sustain market leadership and growth for decades and even generations. Still, on rare occasion, a dependable blue chip will start to lose its way. Over time, factors like increased competition, changing product landscapes or simply a failure to adapt with the changing times can gradually — almost imperceptibly — erode a once-dominant market leader into an outmoded underperformer. Today, perhaps the most poignant example of this is the iconic food products manufacturer Campbell Soup Co. (NYSE: CPB). While Campbell is still formidable, the core products that drove its success for generations are… Read More
Great companies share one key trait: They can sustain market leadership and growth for decades and even generations. Still, on rare occasion, a dependable blue chip will start to lose its way. Over time, factors like increased competition, changing product landscapes or simply a failure to adapt with the changing times can gradually — almost imperceptibly — erode a once-dominant market leader into an outmoded underperformer. Today, perhaps the most poignant example of this is the iconic food products manufacturer Campbell Soup Co. (NYSE: CPB). While Campbell is still formidable, the core products that drove its success for generations are now a hindrance. Simply put, consumers have been shifting to fresh and organic foods, leaving fewer dollars for the company’s less healthful pre-packaged soups, vegetable-based beverages and sauces that account for the bulk of Campbell’s revenue. Because of this trend, the firm has been stunted for many years. At $8.3 billion, the top line increased a mere 9% in the past decade. Current earnings per share (EPS) of $2.41 represent a 4% compound growth rate during that time. In fact, profits have been stuck in neutral since 2010. Campbell’s stock, unsurprisingly, has lagged the broader market. Results are… Read More