We Think You Can Look Beyond Campbell Soup's (NYSE:CPB) Lackluster Earnings

Soft earnings didn't appear to concern Campbell Soup Company's (NYSE:CPB) shareholders over the last week. Our analysis suggests that while the profits are soft, the foundations of the business are strong.

View our latest analysis for Campbell Soup

How Do Unusual Items Influence Profit?

For anyone who wants to understand Campbell Soup's profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit was reduced by US$159m due to unusual items. While deductions due to unusual items are disappointing in the first instance, there is a silver lining. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And, after all, that's exactly what the accounting terminology implies. Assuming those unusual expenses don't come up again, we'd therefore expect Campbell Soup to produce a higher profit next year, all else being equal.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Campbell Soup's Profit Performance

Unusual items (expenses) detracted from Campbell Soup's earnings over the last year, but we might see an improvement next year. Based on this observation, we consider it likely that Campbell Soup's statutory profit actually understates its earnings potential! On the other hand, its EPS actually shrunk in the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. If you want to do dive deeper into Campbell Soup, you'd also look into what risks it is currently facing. At Simply Wall St, we found 1 warning sign for Campbell Soup and we think they deserve your attention.

This note has only looked at a single factor that sheds light on the nature of Campbell Soup's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.