Campbell's
CPB
$21.00
+0.29%
The Campbell's Company is a 150-plus-year-old packaged food manufacturer whose portfolio spans soups, snacks, simple meals, and beverages, with brands including Campbell's, Pepperidge Farm, Goldfish, Snyder's of Hanover, Swanson, Prego, Pace, V8, and Rao's; roughly 90% of revenue is generated in the US, with the remainder from Canada and Latin America. It is a mature, brand-heavy consumer defensive stalwart rather than a growth company, competing on shelf presence, brand equity, and distribution scale in slow-growing categories. The current investor narrative has turned sharply negative: a Q4 earnings miss, a dividend cut, and weak guidance have made CPB a "Bear of the Day" and raised the specter of an S&P 500 exit after 67 years of membership, with management now pivoting to cost cuts and margin repair. The debate centers on whether this is a deep-value turnaround with a still-elevated yield or a value trap in structural decline, and the stock's roughly 38% one-year decline shows the market is currently voting for the latter.…
CPB
Campbell's
$21.00
Related headlines
Investment Opinion: Should I buy CPB Today?
The synthesized recommendation is Hold, with a bearish tilt. The core thesis is that while CPB screens as deeply undervalued on metrics like PS (0.68x) and forward PE (11.45x), the accelerating revenue decline (-4.4% YoY) and margin compression (gross margin down to 27.47% in Q3) present significant risks. The analyst consensus is 'hold' with an average target of $20.85, implying -0.7% downside, and recent downgrades from major firms reinforce caution.
Supporting evidence includes the deep value metrics: PS ratio of 0.68x vs. sector's 1.5-2.5x, forward PE of 11.45x vs. sector's 15-20x, and a dividend yield of 7.05%. However, these are offset by the 116.6% payout ratio, 1.85 debt-to-equity, and Q3 free cash flow of just $29 million. The revenue trajectory is negative, and profitability is shrinking, with net margin at 5.24%. The implied upside to the analyst average target is negative, and the high target of $41.50 requires a full turnaround.
Risks that could invalidate the thesis include a breakdown below the 52-week low of $19.56, which could trigger further selling, and an S&P 500 exit that would force index funds to sell. The rating would upgrade to Buy if revenue growth stabilizes or turns positive, and margins show sequential improvement, or if the stock drops below $18 with a sustainable dividend. It would downgrade to Sell if revenue declines accelerate beyond 5% or if free cash flow turns negative. Relative to its history and peers, CPB is undervalued, but the value trap risk is high until fundamental trends inflect.
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CPB 12-Month Price Forecast
The forward-looking view is bearish due to the accelerating revenue decline and margin compression, which are not yet showing signs of bottoming. While the valuation is deeply discounted, the risk of a value trap is high, as evidenced by the dividend cut and cash burn. Analyst sentiment is negative, with no upgrades and a consensus target below the current price. The near-zero beta means the stock will not benefit from market rallies, and idiosyncratic risks like an S&P 500 exit loom. I would upgrade to neutral if revenue growth stabilizes or turns positive, and downgrade to strong sell if free cash flow turns negative or if the S&P 500 removal occurs.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Campbell's's 12-month outlook, with a consensus price target around $20.85 and implied upside of -0.7% versus the current price.
Average Target
$20.85
0 analysts
Implied Upside
-0.7%
vs. current price
Analyst Count
—
covering this stock
Price Range
$16 - $42
Analyst target range
Coverage is substantial with 17 analysts, but sentiment is decidedly bearish: the consensus recommendation is "hold" with a recommendation mean of 3.3 (where 1 is strong buy and 5 is strong sell), and the average target price of $20.85 sits slightly below the current price of $21.00, implying roughly -0.7% downside. The distribution skews negative, with recent actions including UBS at Sell, B of A Securities at Underperform, Barclays at Underweight, and Bernstein downgrading to Underperform from Market Perform, while only Stephens & Co. moved in the bullish direction (downgrading to Equal Weight from Overweight, which is still a negative revision). The consensus is best characterized as neutral-to-bearish, with the average target essentially at market — a rare configuration that signals analysts see no near-term upside. The target range is extraordinarily wide, from a low of $16.00 to a high of $41.50, a spread of 159% that reflects deep disagreement about whether this is a turnaround or a value trap. The high target of $41.50 implies roughly 98% upside and would require a successful margin-repair program, stabilization of revenue, and multiple re-rating back toward historical norms — essentially a full turnaround thesis. The low target of $16.00 implies about 24% downside and prices in continued revenue decline, further margin compression, and potential S&P 500 removal forcing index-fund selling. The recent institutional rating pattern is almost uniformly negative, with multiple firms reiterating Sell or Underperform ratings in June 2026 following the Q4 miss and dividend cut, and no meaningful upgrades — a signal that the sell-side has not yet found a bottom. The wide spread combined with the negative revision trend suggests high uncertainty and weak conviction, and investors should treat the average target as a ceiling rather than a floor until fundamental trends stabilize.
Bulls vs Bears: CPB Investment Factors
The bear case currently has stronger evidence, driven by accelerating revenue declines, margin compression, and a dividend cut that signals deep financial stress. The bull case rests on deep value metrics and potential cost-cut success, but these are speculative until trends inflect. The single most important tension is whether the cost-cutting and margin repair program can stabilize earnings before the next earnings report, or if further deterioration will lead to an S&P 500 exit and additional selling pressure. With the stock near its 52-week low and analysts overwhelmingly negative, the market is voting for a value trap, but the wide target range ($16-$41.50) reflects deep disagreement. A resolution will likely come from the next quarterly report, which will show if revenue and margins are bottoming.
Bullish
- Deep Value on Sales Metrics: CPB trades at a PS ratio of 0.68x and EV/Sales of 1.36x, dramatically below the packaged foods sector's typical 1.5-2.5x PS range. This 70-90% compression from its own 2021-2025 PS range of 2.58x-7.44x suggests the market is pricing in a permanent impairment rather than a cyclical trough.
- Forward PE Discount to Sector: The forward PE of 11.45x is roughly 25-40% below the 15-20x range for mature branded staples, implying the market expects earnings recovery. With consensus FY EPS of $2.01 versus trailing EPS of $0.06, any stabilization could drive multiple expansion.
- High Yield Despite Cut: The dividend yield of 7.05% remains near the top of its historical range (0.8-1.9% in 2021-2025), even after the recent cut. For income-focused investors, this yield offers substantial compensation for waiting on a turnaround.
- Cost Cuts and Margin Repair: Management is pivoting to cost cuts and margin repair, as highlighted in the Q4 earnings call. If successful, even modest margin recovery from the current 8.74% operating margin could significantly boost earnings given the low base.
Bearish
- Revenue Contraction Accelerating: Q3 FY26 revenue fell 4.4% YoY to $2.366 billion, with a deteriorating multi-quarter trend: $2.677B in Q1, $2.564B in Q2, and $2.366B in Q3. This decline signals share loss to private label and value competitors, undermining the defensive staple thesis.
- Margin Compression Across All Quarters: Gross margin fell to 27.47% in Q3 from 27.96% in Q2 and 29.59% in Q1, while net margin dropped to 5.24% from 5.66% and 7.25% respectively. The trailing gross margin of 28.14% is thin for packaged foods, where mid-30s are typical.
- Unsustainable Dividend and Cash Burn: The payout ratio of 116.6% versus net income confirms the dividend was unsustainable, leading to a cut. Q3 operating cash flow of $99 million was below the $117 million in dividends paid, and free cash flow collapsed to $29 million from $643 million in Q2.
- Stretched Balance Sheet: Debt-to-equity of 1.85 and a current ratio of 0.82 indicate high leverage and weak short-term liquidity. With net change in cash of -$159 million in Q3, the company is burning cash and depends on cost cuts to restore funding.
CPB Technical Analysis
CPB is in a sustained downtrend, with the current price of $21.00 sitting just 4.4% above its 52-week low of $19.56 and a staggering 38.5% below its 52-week high of $34.17 — meaning it trades at only about 61% of its 52-week range. The one-year change of -37.80% versus the S&P 500's +16.22% produces a relative strength of -54.02%, one of the most severe underperformances in the consumer staples universe. This positioning near the bottom of the range signals a falling-knife profile rather than a value opportunity, and the -41.23% max drawdown confirms the severity of the de-rating. Short-term momentum is equally weak: the 1-month change of -7.08% and 3-month change of -7.94% show the decline is ongoing rather than stabilizing, and both figures lag SPY's -1.06% and +3.04% over the same windows. The 6-month change of -3.27% is less bad than the 1-month figure, suggesting the pace of decline reaccelerated recently — a bearish acceleration rather than a deceleration. With a beta of just 0.019, CPB is essentially uncorrelated to the market, so this weakness is entirely idiosyncratic (dividend cut, guidance cut, index-removal risk) rather than macro-driven, which means broad market rallies will not rescue the stock. Key support sits at the 52-week low of $19.56, and a breakdown below that level would likely trigger further selling and potentially accelerate index-fund outflows; resistance is the 52-week high at $34.17, with intermediate resistance around the $23-$24 area where the stock repeatedly failed in August 2026. Given the near-zero beta, position sizing should be driven by stock-specific event risk (earnings, index decisions) rather than market volatility, and the 7.51 short ratio indicates meaningful bearish positioning that could fuel sharp squeezes on any positive catalyst.
Beta
0.02
0.02x market volatility
Max Drawdown
-41.2%
Largest decline past year
52-Week Range
$20-$34
Price range past year
Annual Return
-37.8%
Cumulative gain past year
| Period | CPB Return | S&P 500 |
|---|---|---|
| 1m | -7.1% | -1.6% |
| 3m | -7.9% | +1.3% |
| 6m | -3.3% | +13.9% |
| 1y | -37.8% | +16.3% |
| ytd | -24.2% | +12.1% |
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CPB Fundamental Analysis
Revenue is contracting: the most recent quarter (ending 2026-05-03) posted $2.366 billion, down 4.4% year over year, and the multi-quarter trend is deteriorating — revenue fell from $2.677 billion in Q1 FY26 to $2.564 billion in Q2 to $2.366 billion in Q3, with the prior-year Q3 comparison of $2.475 billion confirming the decline is real rather than seasonal. Segment data shows Baked Snacks at $1.033 billion, Beverages at $755 million, and Soups at $578 million, with the snacks platform (43% of fiscal 2025 revenue) now the key swing factor after driving much of the Rao's-era growth. The decelerating top line undermines the investment case for a defensive staple, since volume declines in packaged food typically signal share loss to private label and value competitors rather than a temporary blip. Profitability is compressing: Q3 net income was $124 million on a 5.24% net margin, down from $145 million and a 5.66% net margin in Q2 and $194 million and a 7.25% net margin in Q1, while gross margin fell to 27.47% in Q3 from 27.96% in Q2 and 29.59% in Q1. The trailing gross margin of 28.14% and operating margin of 8.74% are thin for packaged foods, where mid-30s gross margins are more typical, and the sequential erosion across all three quarters shows cost inflation and promotional pressure are outpacing pricing. The payout ratio of 116.6% versus net income confirms the dividend was unsustainable and explains the cut, and with EPS of just $0.06 on a trailing basis, earnings coverage of the distribution is effectively nonexistent. The balance sheet is stretched: debt-to-equity of 1.85 and a current ratio of 0.82 indicate both high leverage and weak short-term liquidity, while ROE of 10.47% and ROA of 4.95% are modest for a branded food company. Free cash flow tells the real story — TTM FCF of $898 million sounds healthy, but quarterly FCF collapsed to just $29 million in Q3 FY26 from $643 million in Q2 and $97 million in Q1, and operating cash flow of only $99 million in Q3 against $117 million of dividends paid shows the company is now paying out more than it generates. With capex of $70 million in the quarter and net change in cash of -$159 million, CPB is burning cash and will depend on the dividend cut and cost reductions to restore internal funding.
Quarterly Revenue
$2.4B
2026-05
Revenue YoY Growth
-4.4%
YoY Comparison
Gross Margin
27.5%
Latest Quarter
Free Cash Flow
$898000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CPB Overvalued?
Because net income is positive (TTM EPS of $0.06 and Q3 net income of $124 million), the PE ratio is the appropriate primary metric, and CPB trades at a trailing PE of 16.69x versus a forward PE of 11.45x — a roughly 31% compression that implies the market expects earnings to grow meaningfully, consistent with the consensus FY EPS estimate of $2.01 versus the depressed trailing figure. However, the trailing PE is distorted by a near-zero trailing EPS, so the forward PE of 11.45x is the more meaningful anchor and already prices in a substantial earnings recovery. The PS ratio of 0.68x and EV/Sales of 1.36x are the more reliable valuation signals for a low-margin food company and both sit at historically depressed levels. Relative to the packaged foods sector, where mature branded staples typically trade in the 15-20x PE range, CPB's forward PE of 11.45x represents a discount of roughly 25-40%, and its 0.68x PS ratio is well below the sector's typical 1.5-2.5x. This discount is partly justified by the 4.4% revenue decline, 116.6% payout ratio, and 1.85 debt-to-equity, but the magnitude suggests the market is pricing in a permanent impairment rather than a cyclical trough. The PB ratio of 1.73x is near the low end of its own history, and the PEG ratio of -0.50 is meaningless given negative growth. Historical ratios show the stock's PE has ranged from roughly 11.5x to 40.7x over the past three years, and the current trailing PE of 16.69x sits in the lower-middle of that band, while the PS ratio of 0.68x is dramatically below the 2.58x-7.44x range seen from 2021 through 2025 — a compression of 70-90% that reflects both the price decline and the earnings deterioration. The dividend yield of 7.05% is near the top of the stock's historical range (versus 0.8-1.9% in 2021-2025), but that yield is a function of the collapsed share price and a payout that has now been cut, so it should not be treated as a reliable income signal. In aggregate, CPB screens as deeply undervalued on almost every metric, but the valuation is a classic value-trap setup until revenue and margin trends inflect.
PE
16.7x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 12x~25x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
10.6x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are severe. The company's debt-to-equity of 1.85 and current ratio of 0.82 indicate high leverage and weak liquidity, with Q3 operating cash flow of only $99 million against $117 million in dividends paid, forcing a cut. Revenue is contracting at 4.4% YoY, and gross margin has fallen sequentially from 29.59% in Q1 to 27.47% in Q3, showing cost inflation and promotional pressure. The payout ratio of 116.6% confirms the dividend was unsustainable, and with trailing EPS of just $0.06, earnings coverage is effectively nonexistent. Free cash flow collapsed to $29 million in Q3 from $643 million in Q2, and with capex of $70 million, the company is burning cash.
Market and competitive risks are equally concerning. The stock trades at a forward PE of 11.45x, a discount to the sector's 15-20x, but this may be justified by the 4.4% revenue decline and 1.85 debt-to-equity. The near-zero beta of 0.019 means the stock is uncorrelated to the market, so broad rallies won't help; weakness is idiosyncratic. Competitive pressures from private label and value brands are intensifying, as evidenced by volume declines. Regulatory headwinds are minimal, but the risk of an S&P 500 exit after 67 years could trigger index-fund selling, as highlighted in recent news. Analyst sentiment is bearish, with a consensus recommendation mean of 3.3 and recent downgrades from UBS, B of A, and Bernstein.
The worst-case scenario involves a continued revenue decline, further margin compression, and an S&P 500 removal, leading to a drop to the analyst low target of $16.00, which is 24% below the current price of $21.00. The 52-week low of $19.56 represents a 6.9% downside, but a breakdown below that could accelerate selling. The max drawdown of -41.23% shows the severity of de-rating, and in a bear case, investors could lose 24% to the $16 target, or more if the stock falls below the 52-week low. The high short ratio of 7.51 indicates bearish positioning that could fuel further declines if negative news continues.
FAQ
The key risks are financial, competitive, macro, and company-specific. Financially, the debt-to-equity of 1.85 and current ratio of 0.82 indicate high leverage and weak liquidity, with Q3 free cash flow of only $29 million and a payout ratio of 116.6% that led to a dividend cut. Competitively, revenue is declining at 4.4% YoY as consumers shift to private label, and gross margin has fallen to 27.47% from 29.59% in Q1. Macro risks are low due to the near-zero beta of 0.019, but the stock is sensitive to interest rates and inflation affecting input costs. Company-specific risks include the potential S&P 500 removal after 67 years, which could trigger index-fund selling, and the risk of further dividend cuts or earnings misses. Ranked by severity, the financial and company-specific risks are most immediate, followed by competitive pressures.
The 12-month forecast has three scenarios: bull (20% probability) targeting $30-$41.50, base (50%) targeting $19-$23, and bear (30%) targeting $16-$19.56. The base case is most likely, assuming revenue declines moderate and margins stabilize, with the stock trading around the analyst average target of $20.85. The bull case requires successful cost cuts and margin repair, leading to a re-rating. The bear case involves accelerating declines and an S&P 500 exit, pushing the stock to the low target of $16.00. The key assumption behind the base case is that cost cuts provide some support but growth remains elusive. Given the negative momentum and bearish analyst sentiment, the risk is skewed to the downside.
CPB appears undervalued on most metrics, but the discount may be justified by fundamental deterioration. The PS ratio of 0.68x is well below the sector's typical 1.5-2.5x, and the forward PE of 11.45x is a 25-40% discount to the 15-20x range for mature staples. The EV/Sales of 1.36x and EV/EBITDA of 10.60x are also historically low. However, these multiples reflect a 4.4% revenue decline, a 116.6% payout ratio, and a 1.85 debt-to-equity, which suggest the market is pricing in a permanent impairment. Compared to its own history, the PS ratio is 70-90% below its 2021-2025 range, and the PB ratio of 1.73x is near the low end. The market expects continued challenges, and until revenue and margins inflect, the undervaluation is a value trap.
From a risk/reward perspective, CPB is not a compelling buy at current levels. The stock trades at $21.00, with the analyst average target of $20.85 implying -0.7% downside, and the consensus recommendation is 'hold' with a bearish tilt. The deep value metrics (PS of 0.68x, forward PE of 11.45x) are offset by accelerating revenue declines (-4.4% YoY) and margin compression (gross margin down to 27.47%). The biggest downside risk is a drop to the analyst low target of $16.00, representing 24% downside, especially if the company is removed from the S&P 500. For income investors, the 7.05% yield is attractive but was recently cut and may not be sustainable. Only investors with a high risk tolerance and a long time horizon should consider CPB, and even then, it is a speculative bet on a turnaround that has not yet shown signs of success.
CPB is more suitable for long-term, patient investors than short-term traders. The stock is in a sustained downtrend, with a 1-month change of -7.08% and 3-month change of -7.94%, and a beta of 0.019 means it is uncorrelated to market moves, so short-term trading would be driven by idiosyncratic events like earnings. The dividend yield of 7.05% is attractive for income, but the payout was recently cut, and the company is burning cash, so income is not secure. Earnings visibility is low, with a wide analyst target range of $16-$41.50. A suggested minimum holding period is 2-3 years to allow for a potential turnaround, but only for investors who can stomach volatility and potential further declines. Short-term traders might find opportunities around earnings or index decisions, but the risk is high.