Campbell Soup Company: $CPB fairly valued at $34/share

I believe Campbell Soup Company ($CPB), at approximately $34/share is fairly valued on a cash flow valuation basis.  Assuming all else at $CPB meets my standard for good business, I'd buy it today for the long term at $30.

With a heritage that dates back about 140 years, Campbell Soup is now a leading global manufacturer and marketer of branded convenience food products, most notably soup. However, the firm's product assortment spans beyond soup, as its portfolio of well-known brands includes Campbell's, Pace, Prego, Swanson, V8, and Pepperidge Farm. International operations account for around 30% of Campbell's consolidated sales.

I estimated the firm's WACC at 5.98% using the Capital Asset Pricing Model and the company's recent SEC filings but ValuePro's baseline WACC calculator estimates the firm's WACC at 6.60% so I'll go with the higher mark, 6.60%.

Recent free cash flows and noted growth rates:

Year	FCF $Millions
2001	906
2002	748
2003	590
2004	456
2005	658
2006	917
2007	340
2008	468
2009	821
2010	742
TTM	766

Internal Growth Rate: approx. 8%

Average Annual Growth: approx. 7%
CAGR: approx. -2%
Consensus Forecast Industry 5-Year Growth: approx. 14% per year
Consensus Forecast Company 5-Year Growth: approx. 6% per year

Assuming the company achieves a 5-year growth rate in FCF of 6% per year, and assuming that after the next five years, the company achieves no growth in FCF or 0% growth per year forever:

Discounted Cash Flow Valuation

Year	FCF $ Millions
0	766
1	812
2	861
3	912
4	967
5	1025
Terminal Value	16463

The firm's future cash flows, discounted at a WACC of 6.60%, give a present value for the entire firm (Debt + Equity) of $15,726 million. If the firm's fair value of debt is estimated at $3000 million, then the fair value of the firm's equity could be $12,726 million.  $12,726 million / 334 million outstanding shares is approximately $38 per share and a 20% margin of safety is $30. Assuming all else at $CPB meets my standard for good business, I'd buy it today for the long term at $30.

Sources
Morningstar.com

Campbell Soup.com

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.