Campbell Soup Authorizes Share Buyback, Declares Dividend

Zacks Equity Research
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Packaged foods retailer, Campbell Soup Company CPB rewarded investors by approving a new share repurchase program to buy back shares to the tune of $1.5 billion, sans expiration date. This new authorization will replace the company’s existing $1 billion buyback plan that was approved in Jun 2011. Notably, the company has almost utilized its previous authorization.

Concurrently, Campbell Soup also declared a quarterly cash dividend of 35 cents per share, which is payable on May 1, 2017 to shareholders with record as on Apr 12.

The strength of Campbell’s business model is reflected in strong cash generation capabilities and commitment to return value to shareholders. We believe that continued share buybacks will increase investor confidence on the stock.

Evidently, Campbell Soup’s strong balance sheet and cash flows provide financial flexibility to drive future growth, enabling it to sponsor the development of fast-growing businesses, incur capital expenditures and return excess cash to shareholders. As of Jan 29, 2017, the company had cash and cash equivalents of $309 million and generated operating cash flows of $667 million. We remain encouraged by Campbell Soup’s strong cash position and its ability to reward shareholders.

Notably, the company repurchased shares worth $234 million and paid dividends of $207 million during the first half of fiscal 2017, which exhibits its commitment toward shareholders.

We believe that dividends and share repurchases not only enhance shareholders’ return but raise the market value of the stock as well. Through dividend payments and share buybacks, companies persuade investors to either buy or hold the scrip instead of selling it.

Looking ahead, Campbell Soup’s strategic endeavors highlight growth potential, suggesting enhanced value for shareholders through dividend payout as well as share buybacks. This along with a VGM Score of “B” and long-term earnings growth rate of 5.3%, position the company well for future growth.

Other companies that remain keen on rewarding shareholders through share repurchases and regular dividend payments include Colgate-Palmolive Co. CL, Newell Brands Inc. NWL and DSW Inc. DSW.

Nordstrom closed at $56.91 on Mar 22, 2017, down by a marginal 0.3%. Moreover, we note that the stock has declined 5.9% year to date, wider than the Zacks categorized Food – Miscellaneous industry’s fall of 0.6% in same period.



Campbell Soup Currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Newell Brands Inc. (NWL): Free Stock Analysis Report
 
Campbell Soup Company (CPB): Free Stock Analysis Report
 
DSW Inc. (DSW): Free Stock Analysis Report
 
Colgate-Palmolive Company (CL): Free Stock Analysis Report
 
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