Campbell Soup Company (CPB) is set to declare fourth-quarter and full-year fiscal 2013 results on Aug 29. In the last quarter, the company’s earnings surpassed the year-over-year earnings by 11.0% and the Zacks Consensus Estimate by 10.7%. Let us now look at how things have developed for the imminent announcement.
Growth Factors in the Past Quarter
Campbell Soup’s strategy of brand expansion and cost containment efforts again facilitated it to deliver strong third-quarter fiscal 2013 results. Further, Campbell Soup’s sustained focus on top-line growth and its measures such as stabilization of the North American soup and simple meal business, overseas expansion, and growth of healthy beverages and baked snacks businesses to increase return on investment are helping it to post good results.
Our proven model does not conclusively project Campbell Soup as beating earnings this quarter. A stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, that is not the case here due to the following factors:
Zacks ESP: ESP for Campbell Soup is 0.00% since the Most Accurate Estimate stands at 42 cents, which is in line with the Zacks Consensus Estimate.
Zacks #3 Rank (Hold): Campbell Soup’s Zacks Rank #3 increases the forecasting power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call. We caution against stocks with 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
Campbell Soup is not the only firm we are looking up to this earnings season. Our model shows that the following stocks have the right combination of elements to post an earnings beat:
Citi Trends, Inc. (CTRN), Earnings ESP of +10.00% and a Zacks Rank #2 (Buy).
Conns Inc. (CONN), Earnings ESP of +3.33% and a Zacks Rank #2 (Buy).
Lumber Liquidators Holdings, Inc. (LL), Earnings ESP of +9.09% and a Zacks Rank #1 (Strong Buy).
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