Campbell Soup Company Faces Market Challenges Despite Modest Earnings Growth
At a market capitalization of $13.6 billion, the Campbell Soup Company (CPB) is based in Camden, New Jersey. The company specializes in consumer packaged goods, including meals, beverages, and snacks. Famous brands like Campbell’s, Pepperidge Farm, V8, and Prego are part of its extensive portfolio, primarily targeting customers in North America and internationally.
Stock Performance Falls Behind Market Standards
In the past 52 weeks, CPB’s stock has struggled compared to the broader market. The company has seen a 13.2% increase in share value, while the S&P 500 Index ($SPX) has experienced a much larger 36.8% gain. So far in 2024, CPB shares are up 5.5%, in contrast to SPX’s remarkable 25.7% increase year-to-date.
Further narrowing down, the company has also underperformed against the Consumer Staples Select Sector SPDR Fund’s (XLP) 17.5% rise over the last 52 weeks, as well as its 12.2% year-to-date return.
Q4 Earnings Report Reveals Mixed Results
On August 29, Campbell reported better-than-expected Q4 adjusted earnings of $0.63 per share. However, its stock still fell 1.8% due to net sales of $2.3 billion, which, although grew 11% compared to last year, fell short of analyst expectations. There are concerns about the company’s future growth as its organic sales forecast is projected to remain flat to 2%. The divestiture of the Pop Secret brand may further reduce sales and earnings starting in 2025.
Future Earnings Expectations
For the fiscal year ending in July 2025, analysts project CPB’s EPS to grow by 3.9% year-over-year to reach $3.20. Notably, the company has a strong recent track record, having surpassed consensus earnings estimates in the last four quarters.
Among 16 analysts monitoring the stock, the consensus rating is a “Hold,” which includes four “Strong Buy” ratings, nine “Holds,” one “Moderate Sell,” and two “Strong Sells.” This outlook has slightly improved over the last three months, where there were only three “Strong Buy” ratings.
Recent Downgrade Perspectives
Recently, on September 27, DA Davidson downgraded Campbell to “Neutral” with a $51 price target. The downgrade cited expected volume pressures, limited pricing power, and margin challenges due to increased marketing and sales reinvestment, with no immediate prospects for growth.
The average price target of $50.75 suggests an 11.3% premium compared to current share levels, while the highest price target of $58 indicates a potential upside of 27.2% from the current share price.
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On the date of publication, Sohini Mondal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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