S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
How major US stock indexes fared Friday, 4/19/2024
Biden signs bill extending a key US surveillance program after divisions nearly forced it to lapse
MarketBeat Week in Review – 4/15 - 4/19
The drug war devastated Black and other minority communities. Is marijuana legalization helping?
A man escaped Sudan's bloody civil war. His mysterious death in Missisippi has sparked suspicion
Morning sickness? Prenatal check-ups? What to know about new rights for pregnant workers
Record Store Day celebrates indie retail music sellers as they ride vinyl's popularity wave
S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
How major US stock indexes fared Friday, 4/19/2024
Biden signs bill extending a key US surveillance program after divisions nearly forced it to lapse
MarketBeat Week in Review – 4/15 - 4/19
The drug war devastated Black and other minority communities. Is marijuana legalization helping?
A man escaped Sudan's bloody civil war. His mysterious death in Missisippi has sparked suspicion
Morning sickness? Prenatal check-ups? What to know about new rights for pregnant workers
Record Store Day celebrates indie retail music sellers as they ride vinyl's popularity wave
S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
How major US stock indexes fared Friday, 4/19/2024
Biden signs bill extending a key US surveillance program after divisions nearly forced it to lapse
MarketBeat Week in Review – 4/15 - 4/19
The drug war devastated Black and other minority communities. Is marijuana legalization helping?
A man escaped Sudan's bloody civil war. His mysterious death in Missisippi has sparked suspicion
Morning sickness? Prenatal check-ups? What to know about new rights for pregnant workers
Record Store Day celebrates indie retail music sellers as they ride vinyl's popularity wave
S&P 500   4,967.23
DOW   37,986.40
QQQ   414.65
How major US stock indexes fared Friday, 4/19/2024
Biden signs bill extending a key US surveillance program after divisions nearly forced it to lapse
MarketBeat Week in Review – 4/15 - 4/19
The drug war devastated Black and other minority communities. Is marijuana legalization helping?
A man escaped Sudan's bloody civil war. His mysterious death in Missisippi has sparked suspicion
Morning sickness? Prenatal check-ups? What to know about new rights for pregnant workers
Record Store Day celebrates indie retail music sellers as they ride vinyl's popularity wave

Low Beta, High Yield Campbell Soup Company Is Mmm Mmm Good

Low Beta, High Yield Campbell Soup Company Is Mmm Mmm Good

Key Points

  • Campbell Soup Company is a low-beta stock. 
  • The company also offers value and yield for income investors. 
  • Q1 results are better than expected and come with improved guidance as well. 
  • 5 stocks we like better than Campbell Soup

Campbell Soup Company (NYSE: CPB) has proven once again to be a resilient company that income investors might want to own. Given the increasing volatility in the average S&P 500 (NYSEARCA: SPY) stock, it may be one that many other investors may want to own as well. The stock comes with a beta of only 0.30X the S&P 500 which is about as low a beta as you could ask for.

Beta, for those wondering and I know you’re out there, is a measure of a stock’s volatility and anything below 1 is better than the average S&P 500 stock. But that’s not the only reason to own it, not by a long shot. 

Campbell’s Soup Is Inflation-Proof 

Campbell’s Soup was not immune to the onset of inflation. It, like many of its competitors, was caught slightly off guard and it took a little bit of time to catch up. Now, at the start of fiscal Q1, the company has not only caught up with the impacts of inflation but showing considerable brand strength and momentum in the business.

The FQ1 revenue of $2.58 billion is not only up 15.2% from last year but it beat the consensus estimate by $0.140 billion or 570 basis points. The strength was driven entirely by pricing which is up 16% YOY and offset by a slight 1% decline in volume. The decline in volume is negligible and much smaller than many of Campell’s competitors in the Consumer Staples (NYSEARCA: XLY) universe. 

The margins were a bit mixed but ultimately flat YOY at the gross and operating levels and on a GAAP and adjusted basis. This left the EBIT and adjusted EBIT up 15% and the $1.02 in adjusted EPS up the same amount. The EPS beat the consensus by $0.15 as well, about 1150 basis points, which is part of what will drive the stock higher. 

What else will drive the stock higher? The guidance. The company upped its previous guidance for organic revenue growth to 7% to 9% from the previous 4% to 6% and the 5.1% expected by the Marketbeat.com consensus figures. The earnings are expected in a range of $2.95 to $3.00 which is also better than the previous guidance and the consensus expectations and there is upside risk in the outlook. With supply chain hiccups easing, as reported by the company, there is a chance margin could widen by the end of the year. 


Campbell Soup Company Is Paying Its Shareholders 

Campbell Soup Company is paying its shareholders and the stage is set for those payments to continue. The valuation is a little high relative to the broad market and even some competitors like Kraft Heinz (NASDAQ: KHC) but there is value as well. Leading names within the staples group trade in a range of 25X to greater than 30X their earnings and they pay much lower dividend yields.

As for Campbell Soup Company, the stock paid about 2.8% prior to the FQ1 release and it was about 50% of the earnings outlook. The company hasn’t raised its dividend in a year or 2 but it does have increases in its outlook. The balance sheet is strong, business and cash flow are strong, and the history shows a tendency to increase it is at least a possibility and there are repurchases to consider as well. 

Campbell Soup Company is working on 2 separate repurchase allotments that amount to more than $500 million in repurchases over the next few quarters. At least $131 million is specifically for anti-dilutive purchases so there is that as well. Turning to the chart, the stock is trading near a multi-year high and could break out on the new guidance.

A move above $55 would be significant but bulls need to see it stay at that level to start adding to their positions. Until then, Campell Soup Company is still trading below a significant resistance point that may keep it range-bound given the general market conditions. 

Low Beta, High Yield Campbell Soup Company Is Mmm Mmm Good

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 "Reduce" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

10 Best Cheap Stocks to Buy Now Cover

MarketBeat just released its list of 10 cheap stocks that have been overlooked by the market and may be seriously undervalued. Click the link below to see which companies made the list.

Get This Free Report

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Consumer Staples Select Sector SPDR Fund (XLP)N/A$74.44+1.0%2.47%24.92N/AN/A
SPDR S&P 500 ETF Trust (SPY)N/A$495.16-0.9%1.36%N/AN/AN/A
Kraft Heinz (KHC)
3.7272 of 5 stars
$37.78+1.8%4.24%16.36Hold$40.57
Campbell Soup (CPB)
3.8549 of 5 stars
$44.20+1.1%3.35%17.27Reduce$46.38
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


Featured Articles and Offers

Search Headlines: