Campbell Soup (CPB) Stock Still Warming Up Despite Recent Pullback

The $48 area should act as support for Campbell Soup (CPB).
By Bruce Kamich ,

NEW YORK (TheStreet) -- Slow and steady wins the race? That's what we think of when we look at the chart of Campbell Soup (CPB) - Get Report .

Even though CPB has made some dips and some pullbacks, the trend over the past twelve months has been up, according to the above chart. In February, the end of May and late June, CPB encountered resistance around $48. Prices broke below $48 briefly in August and have retreated to that level, again, in recent days. With prices relatively oversold -- looking at the low readings on the stochastic indicator -- I suspect the $48 area will act as support for CPB.

This longer-term chart of CPB, above, shows the slow and steady advance for this iconic name. The On-Balance-Volume (OBV) line is gently up-sloping, and positive. Prices have pulled back to the 40-week moving average. Traders and investors could go long near $48, and add to longs on a move above $52.50 with a sell-stop below $46.

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 multiple strengths, 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 notable return on equity, good cash flow from operations, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

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

  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. 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.
  • Net operating cash flow has significantly increased by 55.14% to $211.00 million when compared to the same quarter last year. In addition, CAMPBELL SOUP CO has also vastly surpassed the industry average cash flow growth rate of -33.08%.
  • 40.87% is the gross profit margin for CAMPBELL SOUP CO which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, CPB's net profit margin of 4.01% significantly trails the industry average.
  • CAMPBELL SOUP CO's earnings per share declined by 48.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CAMPBELL SOUP CO reported lower earnings of $2.20 versus $2.32 in the prior year. This year, the market expects an improvement in earnings ($2.57 versus $2.20).
  • CPB, with its decline in revenue, underperformed when compared the industry average of 3.3%. Since the same quarter one year prior, revenues slightly dropped by 8.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: CPB

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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