Campbell’s Struggles: A Year of Decline Amidst Mixed Earnings Report
Company Background and Recent Performance
Based in Camden, New Jersey, The Campbell’s Company (CPB) produces and sells a variety of food and beverage products both in the U.S. and internationally. Currently valued at $11.2 billion by market cap, Campbell’s operates through two main segments: Meals & Beverages and Snacks.
Stock Performance: A Comparative Analysis
Campbell’s stock has not kept pace with the broader market over the last year. Over the past 52 weeks, CPB shares have dropped nearly 11%, and year-to-date they are down 10.7%. In contrast, the S&P 500 Index ($SPX) has surged by 20.7% and gained 3.1% this year.
When examining other industry benchmarks, CPB also lagged behind the First Trust Nasdaq Food & Beverage ETF (FTXG), which saw a 6.4% decline year-over-year and a 4.9% dip year-to-date.
Disappointing Earnings and Investor Reaction
On December 3, after Campbell’s released its first-quarter results, its stock fell by over 1.5%. The company reported net sales grew by 10.1% year-over-year to $2.8 billion, a figure driven mainly by its acquisition of Sovos Brands. However, organic sales actually decreased by 1% when compared to the previous year. Compounding the issue, the company missed key revenue expectations, shaking investor confidence. Additionally, rising costs of goods sold (COGS) and operating expenses led to a modest 2.5% increase in pretax earnings, which reached $367 million. However, net income declined by 6.8% year-over-year to $218 million due to higher interest expenses.
Analyst Projections and Ratings
For the current fiscal year ending in July 2025, analysts expect CPB to achieve a modest growth of 2.3% year-over-year in non-GAAP earnings, projecting earnings of $3.15 per share. Notably, the company has consistently surpassed analysts’ bottom-line estimates in the past four quarters.
Among the 16 analysts covering CPB, the consensus rating stands at “Hold,” comprised of five “Strong Buy,” eight “Hold,” one “Moderate Sell,” and two “Strong Sell” ratings.
Current Analyst Insights
In a recent report on January 24, Stifel analyst Matthew Smith maintained a “Hold” rating on CPB, setting a price target of $40. In comparison, the mean price target among analysts is $47.18, suggesting a 26.2% premium to current pricing. Additionally, the highest reported target of $56 implies a potential upside of nearly 49.8%.
On the date of publication, Aditya Sarawgi did not hold positions in any mentioned securities. All data herein is for informational purposes. For further details, please refer to the Barchart Disclosure Policy.
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The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.
