Campbell Soup (NYSE:CPB) is a textbook example of why valuation matters. During the summer of 2016 the stock was trading at 23 times earnings and had a dividend yield of only 2%. While 23 times earnings might not sound outrageous, seasoned investors understand that in order to justify that valuation you need to be growing at double digit rates for years. The truth is, at the time Campbell Soup was in a bubble. They were being labeled a "bond proxy", as yield starved investors chased returns from stable companies anywhere they could find them. Nearly all consumer non-cyclical companies were trading at excessive valuations then, setting the stocks, including Campbell Soup up for serious underperformance. Today, after a 33% decline, the stock is finally fairly priced. Should the stock continue to fall, Campbell Soup will begin to show up on the radar of investors looking for a relative bargain from a very stable company. For investors who like to sell options, Campbell Soup allows investors the opportunity to capture significant extra yield while they own this company at a historically low valuation.
One of the best places to look for raw data when you are analyzing a company is the "selected financial data" section of the company's annual report. For Campbell Soup we can find this here.
