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May 25, 2010
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For Immediate Release
Chicago, IL – May 25, 2010 – Zacks.com Analyst Blog features: Sherwin Williams (SHW), Ethan Allen (ETH), USG (USG), Weyerhaeuser (WY) and Campbell Soup Co. (CPB).
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Here are highlights from Monday’s Analyst Blog:
Existing Home Sales: Good News, Bad News
Some of the increase in sales is due to the homebuyer tax credit, but since existing home sales are recorded when the transaction closes, the real rush on the existing home side has not begun. Sales had to be under contract by the end of April to qualify, but have until the end of June to close. The new home sales data, due out on Wednesday, will be more affected by the tax credit in April.
While there are far more existing home sales than new home sales (in March existing sales were 92.9% of the total home sales), they are actually much less important to the economy. That is because each existing home sale will only really stimulate the economy to the extent that the new buyers want to redecorate. While this might be nice for Sherwin Williams (SHW) to see a few more gallons of paint, or for Ethan Allen (ETH) to sell some more furniture, that is a lot less economic activity than building a whole new house and furnishing it.
New homes also use paint from Sherwin Williams, but they also use wallboard from USG (USG) and lumber from Weyerhaeuser (WY) and also employ a lot of construction workers in the process.
Campbell Soup Tops Expectations
Campbell Soup Co. (CPB) posted fiscal 2010 third-quarter adjusted earnings of 54 cents per share, which surpassed the Zacks Consensus Estimate of 51 cents. Quarterly earnings also came in ahead of 48 cents per share recorded in the year-ago period.
During the quarter, Campbell’s net sales grew nearly 7% to $1.8 billion from $1.7 billion in the year-ago period. The growth was mainly driven by favorable currency translations along with a 4% growth in volume and mix and a 1% gain from price and sales allowances, partially offset by a 3% decline from higher promotional spending.
The U.S. Soup, Sauces and Beverages division’s sales rose 5% year-over-year as beverages grew 13%, while broth and ready-to-serve soup sales increased by 9% and 4%, respectively. However, segment sales were partially offset by a 1% decline in condensed soups.
Sales of the Baking and Snacking segment recorded a growth of 11% year-over-year, mainly due to the acquisition of Ecce Panis Inc., a producer of artisan breads. Growth was also aided by the cookies and crackers business, which continued to witness higher sales of Goldfish snack crackers. In Australia, sales growth was driven by favorable currency translation and continued growth in Arnott’s.
Campbell’s International Soups and Sauces segment expanded 11% year-over-year, primarily due to higher sales in Europe, driven by positive currency translation and higher sales in Germany, partially offset by lower sales in France. Asia-Pacific and Canada also contributed to higher sales due to favorable currency translations.
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