Investment Analysis

Pace University |

Financial Analysis Research Report |

Campbell Soup Co. |

|

|

12/16/2009 |

Prepared for:

|

Prof. Peter Pfau

FIN 652

Prepared by:

Nirav Shah

Saquib Shahriar

Table of Contents

1. Recommendation 3

2. Campbell Soup’s Background 3

2.1 Campbell Soup’s Strength: 3

2.2 Campbell Soup’s Weakness: 4

3. Economic Background: 4

4. Industry and Peer Overview: 7

5. DDM valuation & analysis 8

5.1 Constant growth model 9

DDM using expected payout ratio for estimating ‘g’ 9

Implied Growth Rate 9

5.2 Three years of projected dividend and then constant ‘g’ to perpetuity 9

6. Relative Valuation and Analysis 11

7. Valuation Model 12

Appendix 13

1. Recommendation

We suggest a HOLD recommendation on Campbell Soup Co. with a price target of $35.59 at the end of 2010.

2. Campbell Soup’s Background

Campbell Soup Company, listed on New York Stock Exchange under the symbol of CPB, is a well-known American producer of canned soups and related products, was founded in 1869 and is headquartered in Camden, New Jersey. The company's range includes powerful food service brands, including: Campbell's Soup, Pace Sauce, Prego Sauce, Swanson, Stockpot, V8 Juices, and Pepperidge Farm. Each of these brands is positioned as number 1 or 2 in its segment.

Overall, Campbell Soup has been able to balance its growth with low priced products like condensed soup and premium products like V8 juices and Pepperidge Farm products. Over the years Campbell has establish itself in USA, Canada, Latin America, Europe and Asia Pacific.

2.1 Campbell Soup’s Strength:

In the last 2 years of recessionary phase, with its diversified products Campbell Soup has been able to deliver more return than the S & P 500 Index.

Campbell has been growing organically in international markets and with healthy ROE year on year they have shown the capacity to continue to grow in other markets.

In the US Markets the packaged food industry is...