Campbell Soup Co. shares posted their largest gain since 2000 yesterday as the Camden food company raised its 2007 earnings outlook.

The shares climbed $2.71, or 6.85 percent, to close at $42.29 in heavy trading on the New York Stock Exchange. In May 2000, they jumped $3.19 on the news that a human-resources head known for presiding over a major round of job cuts was coming back.

Yesterday's gain - the largest in percentage terms since November 2002, when the stock had dipped below $20 - was based on the business' surprising strength.

The average analyst estimate of earnings for the quarter was 63 cents a share. Campbell reported earnings of 68 cents a share, up 13 percent from 60 cents a share a year ago, excluding unusual items in both periods.

"They beat consensus by a significant amount, and where they beat it is on the margins, which is really good news," said Mitchell B. Pinheiro, an analyst with Janney Montgomery Scott L.L.C. in Center City.

Pinheiro said growth in Campbell's gross margin - revenue minus the cost to make the products - to 42.9 percent of sales this year from 42.1 percent last year "allays a lot of fears."

Under chief executive officer Douglas R. Conant, who joined Campbell six years ago, the company has spent heavily on product improvements, leading to concerns that its profitability had fallen to a permanently lower level.

Campbell, whose brands include Pepperidge Farm baked goods, Pace Mexican sauces, and Godiva chocolate, said profit growth would be stronger than expected this year, 10 percent to 12 percent on a per-share basis, well above the previous projection of 5 percent to 7 percent.

Given a strong outlook for 2007, Citigroup analyst David Driscoll asked in a conference call why Campbell was not revising its long-term goal of 5 percent to 7 percent annual growth in earnings per share.

Conant said Campbell was committed to keeping its revenue growing by spending on marketing, new products, and new market opportunities. All of that restricts the amount of money flowing to the bottom line.

Conant also said he saw higher expenses on the horizon, including soup advertising during the warm-weather months, and market tests in China and Russia early in fiscal 2008, which begins in August.

Campbell saved money in the second quarter by shifting some advertising from national television to radio, print and online media. The company is also moving from 30-second to less-expensive 15-second television commercials.

"It's a different media strategy," Conant said in an interview, "that is giving us more reach for less dollars."

For Campbell Soup's full second-quarter financial report,

Contact staff writer Harold Brubaker at 215-854-4651 or