Things Are Heating Up for Campbell Soup (CPB) Stock

A Campbell Soup (CPB) close above $52 is needed for a more exciting breakout.
By Bruce Kamich ,

NEW YORK (TheStreet) -- The chart of Campbell Soup (CPB) - Get Report has heated up a bit since our last visit on November 11.

The $48 level did indeed act as support for CPB, as the rising 200-day moving average acted as a curving trendline. See chart above. Prices are now in a position to test and close above the 50-day moving average, giving us another buy signal. The Moving Average Convergence Divergence (MACD) oscillator is crossing bullishly from below the zero line, but a close above $52 is needed for a more exciting breakout.

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 a few notable 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 -20.72%.
  • 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.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 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 ($2.56 versus $2.20).
  • 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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