Will Campbell (CPB) Miss Earnings? - Analyst Blog


Campbell Soup Company ( CPB ) is scheduled to report its third-quarter fiscal 2014 results on May 19. Last quarter, this manufacturer of branded convenience food products posted a positive earnings surprise of approximately 1.44%. Let's see how things are shaping up for this announcement.

Factors Influencing the Upcoming Results

Following an excellent second-quarter fiscal 2014, the company remains optimistic about its results for the rest of the year. The company expects sales to increase 4%-5% for fiscal 2014. Moreover, the company expects adjusted earnings growth guidance to be in the range of 2%-4% with fiscal 2014 earnings ranging between $2.53 and $2.58 per share.

However, we believe this optimism for the rest of the year could be slightly impacted by the upcoming quarter results, wherein the company's sales might be hurt by the prevailing weak volume trends, shift of Easter into the fourth quarter this year and the effect of severe winter weather in the third quarter. Additionally, we expect the impact on sales to slightly weigh upon the reported earnings for the third quarter.

Earnings Whispers?

Our proven model does not conclusively project Campbell as likely to beat earnings this quarter. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:

Zacks ESP: ESP (Expected Surprise Prediction) for Campbell is 0.00% since the Most Accurate estimate stands at 59 cents per share, which is in line with the Zacks Consensus Estimate.

Zacks #3 Rank (Hold): Campbell's Zacks Rank #3 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise. We caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) going into earnings announcement, especially when the company is undergoing negative estimate revisions.

Other Stocks to Consider

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

Foot Locker Inc. ( FL ) has an Earnings ESP of +1.91% and a Zacks Rank #2 (Buy).

The Gap Inc. ( GPS ) holds an Earnings ESP of +1.79% and it carries a Zacks Rank #3.

Aeropostale Inc. ( ARO ) with an Earnings ESP of +5.56% carries a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ARO , CPB , FL , GPS



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