We expect the manufacturer of branded convenience food products, Campbell Soup Company (CPB) to beat expectations when it reports first-quarter fiscal 2015 results on Nov 25, 2014.
Why a Likely Positive Surprise?
Our proven model shows that Campbell Soup may beat earnings because it has the right combination of two key components.
Zacks ESP: Campbell Soup currently has an Earnings ESP of +1.37%. This is because the Most Accurate estimate stands at 74 cents per share, while the Zacks Consensus Estimate is pegged at 73 cents.
Zacks Rank: Campbell Soup carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 and 3 have a higher chance of beating earnings. The Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.
The combination of Campbell Soup’s Zacks Rank #3 and Earnings ESP of +1.37% makes us confident of a positive earnings beat.
What is Driving Better-than-Expected Earnings?
Campbell Soup is focusing on boosting its top line and increasing return on investment through a strategic framework. It made significant progress in this direction with the stabilization of the North American soup and simple meal business, overseas expansion as well as growth of the healthy beverages and baked snacks businesses. We believe that Campbell’s prudent investment and strategic efforts toward product innovation and brand building will lead to an increase in its customer base and profitability.
In addition, Campbell Soup has resorted to acquisitions and joint ventures. The acquisitions of three new growth engines in fiscal 2014 namely Bolthouse Farms, Plum Organics and the Kelsen Group, provided for combined annual sales of nearly $1 billion.
Further, its formation of joint ventures with Grupo Jumex and Conservas La Costena in Mexico has enhanced its manufacturing and distribution capabilities along with its presence in the global market. The company also plans to launch over 200 new products in fiscal 2015. We expect this to bring significant changes in the company’s portfolio, providing exciting new brand platforms to create value and attract new consumers, thus improving the its long-term top-line growth prospects.
Additionally, Campbell Soup’s encouraging fiscal 2015 guidance indicates a positive year ahead. Thus, we are optimistic about the upcoming quarterly results.
Other Stocks to Consider
Campbell Soup is not the only firm looking up this earnings season. The following companies are also likely to beat earnings in the to-be-reported quarter:
The Kroger Co. (KR) has an Earnings ESP of +3.28% and a Zacks Rank #2 (Buy).
Zumiez, Inc. (ZUMZ) has an Earnings ESP of +3.85% and a Zacks Rank #2.
DSW Inc. (DSW) has an Earnings ESP of +1.96% and a Zacks Rank #3.
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