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Last update on 2024-06-05

Campbell Soup (CPB) - Piotroski F-Score Analysis for Year 2023 (Final Score: 8/9)

In-depth Piotroski F-Score analysis of Campbell Soup (CPB) for 2023, with a strong final score of 8/9, assessing profitability, liquidity, and operational efficiency.

Knowledge hint:
The Piotroski F-Score is a number between 0 to 9 which reflects the strength of a company's financial position. It is based on 9 criteria involving profitability, liquidity, and leverage. This model helps investors identify stocks that are strong, undervalued investments.
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Short Analysis - Piotroski Score: 8

We're running Campbell Soup (CPB) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

Criteria
Company has a positive net income?
1
Company has a positive cash flow?
1
Return on Assets (ROA) are growing?
1
Operating Cashflow are higher than Netincome?
1
Leverage is declining?
0
Current Ratio is growing?
1
Number of shares not diluted?
1
Cross Margin is growing?
1
Asset Turnover Ratio is growing?
1

Campbell Soup (CPB) has been analyzed using the Piotroski F-Score, which assesses a company's financial strength on a scale of 0 to 9 based on profitability, liquidity, and operating efficiency. Campbell Soup earned a score of 8 out of 9, indicating strong financial health. Key highlights include a positive net income of $858 million in 2023, consistent positive cash flows, an increasing Return on Assets (ROA), and higher operating cash flow compared to net income. While the leverage ratio has slightly increased, the current ratio has improved, and the number of outstanding shares has decreased. The gross margin and asset turnover ratio have also shown growth, contributing to Campbell's strong Piotroski score and reflecting its robust financial performance and operational efficiency over recent years.

Insights for Value Investors Seeking Stable Income

Based on the Piotroski F-Score analysis, Campbell Soup (CPB) appears to be a strong investment opportunity due to its high score of 8 out of 9, which suggests good financial health according to profitability, liquidity, and operational efficiency criteria. Despite a slight increase in leverage, overall indicators such as positive cash flow, improved ROA, and share buybacks bolster the company's financial stability. Therefore, it is worthwhile for an investor to consider looking into CPB further as a solid and potentially undervalued stock.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Campbell Soup (CPB)

Company has a positive net income?

Evaluating the trend and level of net income to assess overall profitability and financial health.

Historical Net Income of Campbell Soup (CPB)

Campbell Soup (CPB) reported a positive net income of $858,000,000 in 2023. Compared to prior years, this continues the trend of profitability, albeit with some fluctuations. For instance, in 2020, the net income was a notable $1,628,000,000, and in 2021 it was $1,002,000,000. Despite the dip in 2022 to $757,000,000, the company has bounced back in 2023. These numbers point to robust financial health and a resilient business model capable of navigating economic cycles. Scoring under this criterion results in a point for CPB, indicating a positive performance.

Company has a positive cash flow?

Cash Flow from Operations (CFO) indicates the cash a company generates from its normal business operations. It is crucial to evaluate because it shows the company's ability to generate sufficient cash flow to maintain and grow operations.

Historical Operating Cash Flow of Campbell Soup (CPB)

In 2023, Campbell Soup (CPB) reported a Cash Flow from Operations (CFO) of $1.143 billion, which is positive. This marks a consistent pattern, as the company's CFO has remained positive over the past 20 years, reflecting a robust operational structure. Between 2012 and 2023, the CFO peaked in 2016 at $1.463 billion. This healthy cash flow signals good liquidity, a sign that Campbell Soup can effectively manage its working capital and invest in future growth. Therefore, Campbell Soup earns 1 point for having a positive CFO in 2023.

Return on Assets (ROA) are growing?

Return on Assets (ROA) measures a company's profitability relative to its total assets. A higher ROA indicates more efficient management at generating profit from assets.

Historical change in Return on Assets (ROA) of Campbell Soup (CPB)

Campbell Soup's ROA increased from 0.0641 in 2022 to 0.0716 in 2023, earning 1 point in the Piotroski analysis. This upward trend, despite being below the industry median of 0.282, is promising. The historical operating cash flow data shows consistent performance, which may support further ROA improvements if sustained.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income is an indicator of high earnings quality because it suggests that the company's profits are backed by actual cash rather than accounting adjustments.

Historical accruals of Campbell Soup (CPB)

For the fiscal year 2023, Campbell Soup (CPB) reported an Operating Cash Flow of $1.143 billion while its Net Income was $858 million. Clearly, the operating cash flow is higher than the net income, marking a positive trend for the company. This indicates that CPB's net income is backed by strong operational cash flows, enhancing the reliability of its reported earnings. Historical data reinforces this trend as CPB has shown consistent capability to generate robust operating cash flows, often exceeding net income. This criterion earns CPB 1 point on the Piotroski Scale.

Liquidity of Campbell Soup (CPB)

Leverage is declining?

Change in leverage measures the proportion of debt to equity and indicates the financial risk and stability of a company.

Historical leverage of Campbell Soup (CPB)

In 2022, Campbell Soup had a leverage ratio of 0.3508, which increased to 0.3903 in 2023. This increment suggests that the company has increased its debt relative to its equity. A higher leverage ratio means greater financial risk, as the company relies more on borrowed funds. Thus, this trend is unfavorable for the Piotroski score, earning a zero. Over the last two decades, the company's leverage has experienced fluctuations but remained mostly stable within a range, except for spikes in certain years such as 2018 and 2019 with 0.5505 and 0.5402 respectively.

Current Ratio is growing?

The Current Ratio measures a company's ability to cover its short-term liabilities with its short-term assets. A higher ratio is generally better.

Historical Current Ratio of Campbell Soup (CPB)

In 2023, Campbell Soup's (CPB) Current Ratio was 0.9275, up from 0.6802 in 2022. This increase is a positive sign as it signifies improved liquidity. However, it's worth noting that CPB's Current Ratio still trails the industry median of 1.6315 for 2023. The trend suggests an improved position in the company’s short-term financial health, even though it hasn't reached the industry norm. Therefore, CPB earns 1 point for this criterion based on the improvement.

Number of shares not diluted?

This criterion examines the change in the number of outstanding shares. A decrease typically indicates that the company is buying back its shares, which can signal strong financial health and a belief that the shares are undervalued.

Historical outstanding shares of Campbell Soup (CPB)

For Campbell Soup (CPB), the Outstanding Shares decreased from 301 million in 2022 to 299 million in 2023. This is a positive trend, as it suggests that the company is purchasing its own shares back. Over the last 20 years, the outstanding shares have generally trended downward from 411 million in 2003 to 299 million in 2023. This consistent decrease can be perceived as a positive indicator, reflecting Campbell Soup's focus on boosting shareholder value. As a result, Campbell Soup earns 1 point for this criterion under the Piotroski analysis.

Operating of Campbell Soup (CPB)

Cross Margin is growing?

The gross margin of a company measures the difference between sales and the cost of goods sold, divided by revenue. It essentially indicates the percentage of revenue that exceeds the cost of goods sold. For Campbell Soup (CPB), this metric is crucial as it signifies how effectively the company is managing its production costs and pricing strategy.

Historical gross margin of Campbell Soup (CPB)

In 2023, Campbell Soup reported a gross margin of 0.3117, up from 0.3068 in 2022. This increment corresponds to an increase of 0.0049 or 0.49%. Although the surge in the gross margin is modest, it signals a slight improvement in the company's ability to control its production costs relative to its sales. Additionally, when examining the last 20 years, Campbell Soup's gross margin has generally trended downward from a high of 0.4302 in 2003 to lower levels in recent years. However, Campbell's gross margin remains above the industry median gross margin of 0.282 in 2023, showing that the firm continues to outperform its industry peers in this area. Therefore, Campbell Soup gains a point for this criterion due to the improvement in 2023.

Asset Turnover Ratio is growing?

The asset turnover ratio measures a company's ability to generate sales from its assets. It is calculated by dividing net sales by total assets.

Historical asset turnover ratio of Campbell Soup (CPB)

In 2023, Campbell Soup's asset turnover ratio was 0.7814, up from 0.7248 in 2022. This indicates an improvement in efficiency, as the company generated more revenue per unit of asset employed. Looking at the historical data, the company's asset turnover has generally been on a declining trend over the past 20 years, peaking around 2008. Despite the long-term decline, the recent uptick from 2022 to 2023 suggests an immediate positive shift. Therefore, for this criterion, Campbell Soup earns 1 point.


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