Campbell Soup Company (CPB) is scheduled to report fourth-quarter fiscal 2014 results on Sep 8. Last quarter, this manufacturer of branded convenience food products posted a positive earnings surprise of approximately 5.1%. Let's see how things are shaping up for this announcement.
Factors Influencing the Upcoming Results
Though the company concluded the last quarter with better-than-expected bottom-line results, its margins remain under pressure due to persistent inflationary cost situation and unfavorable foreign currency translations. Earlier, the company had stated that the aforementioned factors will continue to impact its results for the rest of fiscal 2014.
Therefore, it had lowered its fiscal 2014 earnings guidance range. Campbell now expects adjusted earnings growth to be at the lower-end of previously projected range of 2%–4% or $2.53–$2.58 per share. Thus we remain apprehensive about the company’s performance in the upcoming 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 for Campbell is 0.00% since the Most Accurate estimate stands at 49 cents per share, which is in line with the Zacks Consensus Estimate.
Zacks Rank: Campbell’s Zacks Rank #3 (Hold) 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:
Limoneira Company (LMNR) has an Earnings ESP of +12.50% and a Zacks Rank #2 (Buy).
Palo Alto Networks, Inc. (PANW) with an Earnings ESP of +9.09% carries a Zacks Rank #3.
Calavo Growers Inc. (CVGW) holds an Earnings ESP of +8.70% and carries a Zacks Rank #3.
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