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Why Campbell Soup (CPB) Stock Is Falling In Pre-Market Trading Today

NEW YORK (TheStreet) -- Campbell Soup (CPB) shares are dropping in pre-market trading , down -4.7% to $42.99, on Monday after the company lowered its full year guidance in its third quarter earnings report.

The company announced that it expected full year 2014 sales to grow 3%, down from its previous estimate of 4%-5% growth, and in turn lowered its full year profit projections to the low end of its previously announced $2.53 - $2.58 earnings per diluted share guidance.

The canned soup maker reported quarterly revenue of $1.97 billion, falling short of analysts $2 billion projections, while earning a profit of 62 cents per diluted share, 3 cents better than what analysts anticipated.

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TheStreet Ratings team rates CAMPBELL SOUP CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate CAMPBELL SOUP CO (CPB) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, growth in earnings per share, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CPB's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 5.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 71.0% when compared to the same quarter one year prior, rising from $190.00 million to $325.00 million.
  • CAMPBELL SOUP CO has improved earnings per share by 37.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CAMPBELL SOUP CO reported lower earnings of $2.16 versus $2.41 in the prior year. This year, the market expects an improvement in earnings ($2.53 versus $2.16).
  • 38.93% is the gross profit margin for CAMPBELL SOUP CO which we consider to be strong. Regardless of CPB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CPB's net profit margin of 14.24% compares favorably to the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Food Products industry and the overall market, CAMPBELL SOUP CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: CPB Ratings Report

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