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Why Campbell Soup's Earnings Might Disappoint in Fiscal 1Q18

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Part 5
Why Campbell Soup's Earnings Might Disappoint in Fiscal 1Q18 PART 5 OF 5

What Analysts Recommend for Campbell Soup

Majority of analysts recommend a “hold”

Campbell Soup’s (CPB) soft volume trend has kept analysts on the sidelines with the majority of them maintaining a neutral recommendation. The company is witnessing lower sales in its soups and beverages segment in the US (SPY). Meanwhile, higher input costs and increased interest expenses are expected to hurt the company’s profitability.

However, improvements in the Fresh and the Global Biscuits and Snacks segments are expected to help the company’s top line performance. Plus, increased cost and productivity savings and lower selling and marketing expenses are expected to supplement the bottom line.

What Analysts Recommend for Campbell Soup

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Rating summary

Of the 17 analysts providing recommendations on Campbell Soup stock, 59.0% rated it a “hold,” and 29.0% maintained a “sell” rating. Meanwhile, 12.0% of the analysts have a “buy” rating. Campbell Soup’s stock closed at $47.42 on November 10, reflecting a potential upside of 5.0% to the analysts’ target price of $49.79 per share. Recently, UBS lowered its target price on Campbell Soup stock to $42.00 from $47.00 per share.

Valuation summary

Campbell Soup stock was trading at a forward PE multiple of 15.6x as of November 10, 2017, which is below the peer group average of 17.8x. The company’s peers including General Mills (GIS), Kraft Heinz (KHC), Conagra (CAG), Mondelēz (MDLZ), Kellogg (K), and Hershey (HSY) stock were trading at forward PE ratios of 17.1x, 21.0x, 18.2x, 18.2x, 15.5x, and 21.5x, respectively.

Meanwhile, the S&P 500 (SPX) was trading at a forward PE multiple of 18.4x on the same date.

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