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S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
THE BEST BLACK FRIDAY DEAL YET (Ad)
Sober or bright? Europe faces holidays during energy crunch
Biden eases Venezuela sanctions as opposition talks resume
THE BEST BLACK FRIDAY DEAL YET (Ad)
Whole Foods decision to pull lobster divides enviros, pols
Airbnb has a plan to fix cleaning fees
THE BEST BLACK FRIDAY DEAL YET (Ad)
Railway workers in Austria to strike Monday in pay standoff
Saudi viewers angry over apparent ban on World Cup streaming
S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
THE BEST BLACK FRIDAY DEAL YET (Ad)
Sober or bright? Europe faces holidays during energy crunch
Biden eases Venezuela sanctions as opposition talks resume
THE BEST BLACK FRIDAY DEAL YET (Ad)
Whole Foods decision to pull lobster divides enviros, pols
Airbnb has a plan to fix cleaning fees
THE BEST BLACK FRIDAY DEAL YET (Ad)
Railway workers in Austria to strike Monday in pay standoff
Saudi viewers angry over apparent ban on World Cup streaming
S&P 500   4,026.12
DOW   34,347.03
QQQ   286.92
Considerations When Rolling Over a 401(k) into a Roth IRA
THE BEST BLACK FRIDAY DEAL YET (Ad)
Sober or bright? Europe faces holidays during energy crunch
Biden eases Venezuela sanctions as opposition talks resume
THE BEST BLACK FRIDAY DEAL YET (Ad)
Whole Foods decision to pull lobster divides enviros, pols
Airbnb has a plan to fix cleaning fees
THE BEST BLACK FRIDAY DEAL YET (Ad)
Railway workers in Austria to strike Monday in pay standoff
Saudi viewers angry over apparent ban on World Cup streaming

Campbell Soup Company Is Mmm Mmm Good For Income Portfolios

Campbell Soup Company Is Mmm Mmm Good For Income Portfolios

The price action in Campbell Soup Company (NYSE: CPB) shed 7% in the wake of the Q4 earnings report but income investors should be cheering the news. Campbell Soup Company is a high-yielding value among consumer staples (NYSEARCA: XLP) stocks, a buy-and-hold name for income investors, and it just went on sale. Yes, the Q4 results were only as-expected and the guidance was tepid, but neither is worth a high-single-digit decline in share prices, especially with risk-off names back in favor. The decline is driven more by the CEO commentary than anything else and even it is not as bad as it may sound. The company says inflationary pressures are still a risk but growth is still expected on the top and bottom lines and there is an opening for outperformance as well. 

"With previous pricing actions fully reflected on (the) shelf, and elasticities expected to be slightly above fiscal 2022 levels, the company expects sales growth in both divisions. The company expects improved supply chain execution and disciplined investment in its brands to drive further share recovery. Productivity improvements and cost savings initiatives will continue to play an important role in mitigating inflation, which is expected to remain elevated."

Campbell Soup Company Canned By Inflation? 

Campbell Soup Compay had a good quarter with revenue of $1.99 billion growing 6.4% over last year. The revenue also beat the Marketbeat.com consensus figures but by a slim margin and pricing played a large role. The company says pricing increases of 14% more than offset a 4% decline in volume and a 3% increase in promotional spending but did not indicate if additional pricing increases would be forthcoming. On a segment basis, both the Meals and Snacks segments grew a net 6% with differing results in regard to volume and promotional spending. The Snacks segment saw its volume fall by 3% compared to 6% for Meals but it came at the cost of higher promotional activity which was centered in the segment. 


Moving down to the margin, the news is mixed with the GAAP margins shrinking considerably and the adjusted margin growing. The mitigating factor is the GAAP margins were deeply impacted by changes in pension-related accounts and other one-off events that don’t reflect the underlying business. The adjusted margin widened at the gross and operating levels and left the adjusted EPS of $0.56 up 8% from last year and in line with expectations. The takeaway, however, is the adjusted operating margin did not widen as much as expected and did not reflect the slim margin of outperformance on the bottom line. This weakness, however, small, is reflected in the guidance as well and helped to sour the sentiment. 

The company is guiding F2023 revenue to a range of 4% to 6% versus the 2.77% consensus. The range is a bit wide but well above the consensus figures and supported by pricing actions put in place over the last year. The bad news is that margins will not widen to match and the adjusted EPS of $2.85 to $2.95 don’t compare well to the consensus of $2.92. The takeaway here is the guidance is still in-line with the expectations and leaves some room for outperformance which is no reason for the stock to fall as much as it has. The stock is trading at only 16.5X its earnings and paying 3.15% in yield at this level making it one of the best value-to-yield combinations in the group so any additional downside will most likely be limited. Kraft-Heinz (NASDAQ: KHC) stands out as a better combination at 14X and 4.25% yield but only just. 

The Technical Outlook: Campbell Soup Company Falls To Support 

The price action in Campbell Soup Company fell hard but it is still above a firm support level at the $45 region. This level is coincident with a strong-looking level of support that formed earlier this year and should be able to hold prices from falling any further. If not, shares of CPB could move down to the $42 range where they’d be a bigger value and higher yield. 

Campbell Soup Company Is Mmm Mmm Good For Income Portfolios

Should you invest $1,000 in Campbell Soup right now?

Before you consider Campbell Soup, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Campbell Soup wasn't on the list.

While Campbell Soup currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Campbell Soup (CPB)
1.6378 of 5 stars
$53.04+1.0%2.79%21.22Hold$47.90
Consumer Staples Select Sector SPDR Fund (XLP)N/A$76.25+0.1%2.39%N/AN/AN/A
Kraft Heinz (KHC)
2.0821 of 5 stars
$38.90flat4.11%39.69Hold$40.75
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

Contributing Author: Technical and Fundamental Analysis

Thomas got his start with the markets while working as a Chef. In 2005 a chance invitation to attend the seminar “How To Buy And Sell Your Own Stocks” altered his worldview. Soon trading and stocks consumed his every waking moment to the point of excluding all else. Thomas now enjoys a much different lifestyle engaged in his true passion, uncovering great investments.
Contact Thomas Hughes via email at tmhughes.writeon@gmail.com.