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Aug. 30, 2021, 12:13 p.m. EDT

Is Campbell Soup a Buy Heading Into Earnings?

Aug 30, 2021 (Baystreet.ca via COMTEX) -- Campbell Soup (NYS:CPB) hit new 52-week lows last week as it tumbles into its fourth-quarter earnings, which it will report on Sept. 1. The stock has fallen out of favor with investors this year as an improving economy and a shift away from stay-at-home stocks has sent shares of Campbell
Soup to levels not seen since the summer of 2019.

The company last released its quarterly results on June 9 where revenue of just under $2 billion for the period ending May 2 was down 11% from the same quarter in 2020. Campbell's CEO Mark Clouse noted back then that the company was facing additional headwinds related to inflation and an increase in supply chain expenses. Campbell's expects that for the full year, its net sales will be down by between 3% and 3.5%.

Today, the stock trades at 14 times its future earnings and 15 times the profit it has generated over the trailing 12 months. For a company that's likely going to continue to go back to the days of struggling to generate much growth, it may still be an expensive buy with more of a possible fall in price to come.

Given the challenges that Campbell's is facing, there's not much of a reason to be optimistic that it will have a strong earnings performance, much less rise on the results. However, the stock is still a good buy if for no other reason than its dividend, which yields a solid 3.6%. Investors may want to keep an eye out on earnings day because a steep selloff could make its yield go even higher, making the stock an even more attractive buy for income investors.


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