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Campbell Soup (CPB) Q3 Earnings: Is a Surprise in Store?

Campbell Soup Company CPB is slated to release third-quarter fiscal 2016 results on May 20, before the opening bell. While the company’s earnings met the Zacks Consensus Estimate in the last quarter, it has an average positive surprise of 12.2% over the trailing four quarters. Let’s see how things are shaping up for this announcement.



Factors Influencing this Quarter

Campbell’s quarterly results have been solid for a while now, highlighting its inherent strength. Also, the implementation of its portfolio reorganization and cost-cutting initiatives is likely to continue enhancing overall execution and boost financial results. However, adverse currency movements, which weighed on Campbell’s top line in the preceding quarter, are expected to linger in fiscal 2016 and impact results.

For fiscal 2016, management had projected sales growth in a range of -1% to flat. Also, adjusted earnings for the fiscal are anticipated to increase 9%–12% to roughly $2.88–$2.96 per share. Currency headwinds are expected to impact the fiscal 2016 bottom line by 2 percentage points. This makes us slightly cautious about the company’s upcoming results.

Earnings Whispers

Our proven model does not conclusively show that Campbell is likely to beat earnings this quarter. This is because a stock needs to have both a positive  Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Earnings ESP for Campbell is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 65 cents.

Zacks Rank: Campbell’s Zacks Rank #2 (Buy) increases the predictive power of ESP. However, the company’s ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Best Buy Co., Inc. BBY, which is scheduled to release earnings on May 24, 2016, currently carries a Zacks Rank #2 and an Earnings ESP of +2.94%.

DSW Inc. DSW, slated to release earnings on May 24, 2016, currently carries a Zacks Rank #3 (Hold) and an Earnings ESP of +2.17%.

PVH Corp. PVH, slated to release earnings on May 25, 2016, currently carries a Zacks Rank #3 and an Earnings ESP of +1.40%.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
CAMPBELL SOUP (CPB): Free Stock Analysis Report
 
DSW INC CL-A (DSW): Free Stock Analysis Report
 
BEST BUY (BBY): Free Stock Analysis Report
 
PVH CORP (PVH): Free Stock Analysis Report
 
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