Let’s face it, this has been a pretty tough market recently. Just yesterday morning it looked like the rally that began Thursday morning was going to continue into this week. Everything was smooth sailing and most stocks on the radar were flying through the roof. Well, what happened? By the close Monday we had most major indexes in the red and a market that didn’t look like it wanted to rally at all. I saw huge swings on individual stocks all day, going from huge winners to the biggest loser.
With so many troubled stocks out there, I’m trying to use the power of the Zacks Rank to help you avoid some stocks that look very safe on the surface, but actually are dwindling their earnings estimates and heading in the wrong direction. Among these stocks is today’s Bear of the Day, Campbell Soup (CPB).
I feel like the Seinfeld character the Soup Nazi because I’m yelling “NO SOUP FOR YOU” with this one. Campbell’s currently is a Zacks Rank #5 (Strong Sell) among an industry that currently ranks in the Bottom 27% of our Zacks Industry Rank. I’m sure most of us have had several cans of Campbell’s soup in our lives but the brand nowadays is more than just soup. Campbell Soup Company is a global manufacturer and marketer of high quality, branded convenience products. The company operates in three business segments: Soup and Sauces, Biscuits and Confectionary, and Away From Home.
Campbell’s has worked hard to come back from a devastating earnings miss in Q3 2013. At the time, analysts were looking for 87 cents per share out of the company but were very disappointed by the 66 cents print that came across as the final number. This 21 cent miss caused many analysts to rethink their expectations for the company.
Over the last thirty days, eleven analysts have revised their earnings estimates for the current year to the downside. Even next year’s numbers have five analysts guiding lower. The revisions for the current year have dropped consensus estimates down from $2.61 all the way to $2.47. This 14 cent drop amounts to about a 5.3% decline in expectations.
The stock price has struggled as of late. After enjoying a fantastic run from January 2013’s lows below $35 to nearly $50 in May 2013, CPB struggled to find a comfortable trading range to settle in. Regaining a bullish trend in early 2014, CPB rose from the high $30 level back within earshot of 2013’s highs.
The stock price peaked at $46.67 in June of this year before beginning another leg downward, fishing out support down near the $41 mark to end July. Another gasp towards the highs stalled out just shy of $45. Since then you have a stock that has been in a downtrend for about a month and now has entered oversold territory with the stochastics down at 25.97. Currently the 40 day moving average is camped out well above the price, indicating the downtrend is still in full swing.
Investors looking for a more attractive name in the same industry should look at Hain Celestial Group (HAIN). Hain is a Zacks Rank #1 (Strong Buy).
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