3 Familiar Food Stocks Getting Hammered

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food stocks - 3 Familiar Food Stocks Getting Hammered

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U.S. equities are holding with modest gains on Friday after a relatively subdued non-farm payrolls report. The motivation instead seems to be focusing on reports that President Donald Trump is walking back a threat to shut the government down over boarder wall funding as well as possible action on immigration.

Amid these macro-level concerns, there is some interesting sector-level action underway.

Biotechs are getting a bid on fading healthcare reform fears. Automakers are rising on post-hurricane buying hopes. And retailers are getting slammed on concerns about a combination of Amazon.com, Inc. (NASDAQ:AMZN) and Whole Foods.

But what has caught my eye is the crushing selling pressure hitting key packaged foods stocks amid poor results, broad pressure against brand-name products vs. cheaper store brands, and a general sense that these companies are losing their appeal.

Here are three that are starting to feel the pinch right now.

Food Stocks Getting Hammered: Campbell Soup (CPB)

Food Stocks Getting Hammered: Campbell Soup (CPB)Campbell Soup Company (NYSE:CPB) shares are getting slammed hard on Friday, capping a near 20% decline over the past two weeks in the wake of disappointing earnings and weak guidance. The company reported earnings of 52 cents per share — 3 cents below estimates — on a 1.4% drop in revenues. Guidance missed estimates badly, with management looking for earnings of $3.04 to $3.11 per share vs. the $3.20 analysts were expecting.

Management cited a tough environment for the packaged foods industry “due to shifting demographics, changing consumer preferences for food, the adoption of new shopping behaviors and the dynamic retailer landscape.”

RBC Capital Markets analysts lowered their price target on CPB, warning that without dramatic cost reductions or large-scale M&A, the company will have a hard time returning to its sales and earnings growth goals.

Food Stocks Getting Hammered: Kellogg (K)

Food Stocks Getting Hammered: Kellogg (K)Kellogg Company (NYSE:K) shares have plunged to retest the early July lows near $65 a share. That’s down more than 8% from the early August reaction high near the 200-day moving average and a 13% decline from the high set in February.

The company reported better-than-expected earnings of 97 cents per share — 5 cents better than analyst expectations — on Aug. 3 on in-line revenues that dropped by 2.5%. RBC Capital Markets analysts downgraded shares on Aug. 1, however, on concerns over an accelerating decline in branded food sales.

The company will next report on Oct. 31 before the bell.

Food Stocks Getting Hammered: General Mills (GIS)

Food Stocks Getting Hammered: General Mills (GIS)

Like Kellogg, General Mills, Inc. (NYSE:GIS) has declined to test its July lows after threatening a break above its 200-day moving average in the middle of August. Shares have benefited from some off-and-on M&A takeover speculation, but nothing concrete has come out.

Back in June, analysts at Stifel cut their price target on management comments about soft profitability, the need for reinvestment in the business, and general headwinds in the North American market.

The company will next report results on Sept. 20 before the bell. Analysts are looking for earnings of 77 cents per share on revenues of $3.79 billion. When the company last reported on June 28, earnings of 73 cents beat estimates by 2 cents per share despite a 3.1% revenue decline.

Anthony Mirhaydari is founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.


Article printed from InvestorPlace Media, https://investorplace.com/2017/09/3-familiar-food-stocks-getting-hammered/.

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