M'm! M'm! Good!

I'm the one. No, not the one who came into Campbell Soup (CPB - Get Report) earnings long the name. I was not so bold, especially in the wake of what happened over at Kraft Heinz (KHC - Get Report) , and the barren wasteland that has become the center aisles of your local grocery. No, I am the one shopping those aisles. I am the one that comes home with a bag full of canned soup every few weeks, and I am the one who still thinks the food is good. I am an Irish guy in his mid-50's who grew up on the stuff, and that indeed has been the problem. They are not making any more of my demographic. We have peaked in numbers, and have started to contract. The newer, faster, stronger models don't really go for this type of grub. Have you ever tried the low-sodium corn chowder? Deelish.

Mmm... Sort of Okay

Campbell Soup reported the firm's fiscal Q2 financial results on Wednesday morning. On, the surface everything looks decent. Adjusted earnings beat expectations, as did revenue which was up 24.3% year over year. After that, things get a bit dicey. The 24% growth? That was largely due to the firm's acquisitions of Snyder's-Lance and Pacific Foods. Organic growth was flat. Then there are the non-adjusted results. Let's just say that the firm reported a loss. GAAP EPS printed at -$0.20 thanks to a $346 million write-down associated with the firm's much maligned venture into fresh foods. This, by the way, was the fourth quarter since September of 2016 that Campbell was forced to write something down for this unit. At least the firm has staked out plans to sell that business.

So, I think we have ascertained that these earnings are really not so hot. The reason that the shares have popped to the upside this morning is probably the firm's focus. Guidance has been reaffirmed, and while there will be divestitures going forward, the firm has already agreed to sell Garden Fresh Gourmet in addition to that now planned sale of the already mentioned fresh foods unit. In addition, the firm will withdraw from competing globally and return to what they do best. Satisfy the demographic that does appreciate the product... focusing on North American packaged goods. A winning strategy? We'll see.

The Chart

Those thinking of hopping on board the 5% move this morning will need to see this chart. The more than two year long Pitchfork model remains unthreatened from below. The firm will pay shareholders an annual dividend of $1.40 (Yield: 4.25%). That's certainly a positive, more so I think if the shares can be grabbed somewhat closer to the obvious $32 support level, or at least wait for the chance to buy the shares below $33.40 so that at least at the level with the firm's payment, the trader will be at breakeven.

Yes, I will continue to buy the soup. No, my portfolio will not. At least not yet.

At the time of publication, Stephen Guilfoyle had no position in the securities mentioned.