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What to Expect from Campbell Soup's (CPB) Q4 Earnings?

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Campbell Soup Company (CPB - Free Report) is slated to release fourth-quarter fiscal 2016 results on Sep 1, before the opening bell. While the company’s earnings met the Zacks Consensus Estimate in the last two quarters, it has posted an average positive surprise of 6.9% over the trailing four quarters. Let’s see how things are shaping up for this announcement.

CAMPBELL SOUP Price, Consensus and EPS Surprise
 

CAMPBELL SOUP Price, Consensus and EPS Surprise | CAMPBELL SOUP Quote

Factors Influencing this Quarter

Campbell has been gaining from the implementation of its portfolio reorganization and cost-cutting initiatives, which are likely to continue enhancing overall execution and boost financial results. Further, the company’s focus on its strategic initiatives, aimed at strengthening its brand portfolio, bodes well.

While these strategies augur well, management recently trimmed its sales outlook for fiscal 2016 on account of product recalls, thus raising concerns. Hence, it now anticipates net sales growth for the fiscal in a range of -2% to -1%. Further, adverse currency movements, which weighed on Campbell’s top line in the preceding quarter, are expected to impact the upcoming results as well.

While the sales view was curtailed, management reiterated its EBIT and earnings per share (EPS) outlook. The company continues to project EBIT and EPS growth in a band of 11%–13% each, with EPS for fiscal 2016 envisioned between $2.93 and $3.00. So, let’s see if Campbell can keep its beat-or-meet trend alive in the quarter to be reported.

Earnings Whispers

Our proven model does not conclusively show that Campbell is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Campbell is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 50 cents.

Zacks Rank: Campbell’s Zacks Rank #3 (Hold) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Dollar Tree, Inc. (DLTR - Free Report) , scheduled to report earnings on Aug 25, currently has an Earnings ESP of +4.11% and a Zacks Rank #2 (Buy).

Casey's General Stores, Inc. (CASY - Free Report) , expected to report earnings on Sep 13, currently has an Earnings ESP of +0.56% and a Zacks Rank #3.

Fortune Brands Home & Security, Inc. , expected to report earnings on Oct 19, currently has an Earnings ESP of +1.30% and a Zacks Rank #2.

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