Why Campbell Soup Stock Is Rated a "Hold With Caution" Today
Campbell Soup (NYSE: CPB) is a $18 billion company today. Investors that bought shares one year ago are sitting on a -11.29% total return. That's below the S&P 500's return of 18.65%.
Campbell Soup stock is underperforming the market. It's beaten down, but it reports earnings Friday morning. So is it a good time to buy? To answer this question we've turned to the Investment U Stock Grader. Our research team built this system to diagnose the financial health of a company.
Our system looks at six key metrics...
✗ Earnings-per-Share (EPS) Growth: Campbell Soup reported a recent EPS growth rate of -61.18%. That's below the food products industry average of 13.94%. That's not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the food products industry is 27.23. And Campbell Soup's ratio comes in at 18.39. It's trading at a better value than many of its competitors.
✗ Debt-to-Equity : The debt-to-equity ratio for Campbell Soup stock is 235.16. That's above the food products industry average of 70.86. That's not a good sign. Campbell Soup's debt levels should be lower.
✗ Free Cash Flow per Share Growth : Campbell Soup's FCF has been lower than its competitors over the last year. That's not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It's one of our most important fundamental factors.
✗ Profit Margins : The profit margin of Campbell Soup comes in at 4.65% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Campbell Soup's profit margin is below the food products average of 7.53%. So that's a negative indicator for investors.
✓ Return on Equity : Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Campbell Soup is 33.18%, and that's above its industry average ROE of 17.63%.
Campbell Soup stock passes two of our six key metrics today. That's why our Investment U Stock Grader rates it as a hold with caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That's why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth. For more details, click here.
Thoughts on this article? Leave a comment below.