The Campbell’s Company (CPB) reported 25Q1 diluted GAAP EPS of $0.72, compared with last year’s $0.78. Non-GAAP EPS of $0.89 was below last year’s $0.91, but ahead of my estimate of $0.82. Net sales were $2.77 billion, up 10.1% from 24Q1, due to the Sovos Brands acquisition, but 3.3% below my estimate of $2.87 billion. Organic net sales declined 1% YOY. The primary reason for the earnings beat vs. my estimate was lower than expected administrative expenses. The company reported that its cost cutting initiative, including the integration of Sovos, is ahead of plan.
Management said that the quarterly results were mostly in line with its expectations. Excluding Sovos, Campbell’s in-line performance was flat, as expected. The 1% decline in organic sales was attributed to an inventory adjustment caused by delayed shipments for this year’s late Thanksgiving holiday. Overall, net sales increased 10.1%, while EBIT rose 2.5%. Adjusted EBIT, which excludes restructuring, acquisition-related and other costs, rose 6.1%, though adjusted EBIT margin fell 60 bp to 15.6%. Meals & Beverages segment earnings rose 17%, as the benefit of Sovos was only partially offset by lower earnings in the base business. Snacks segment earnings fell 12% on a 4% drop in sales, as lower sales of partner (private label) brands were only partially offset by growth in the Leadership Brands.
Campbell’s fiscal 2025 guidance is mostly unchanged. Management anticipates net sales growth of 9%-11%, due to Sovos. Organic net sales should be flat to up 2%. Adjusted EBIT growth is pegged at 9%-11%, but interest expense will be higher due to the acquisition and recent refinancing. Thus, 2025 adjusted EPS is expected to be $3.12-$3.22, up 1%-4%. My projections are in line with guidance. I anticipate revenues of $10.5 billion, up 9.1%, GAAP EPS of $2.49, up $0.03 from my previous report, and adjusted EPS of $3.17, down $0.05. For fiscal 2026, I see revenues of $10.7 billion, up 2.1%, GAAP EPS of $3.13, down $0.01, and adjusted EPS of $3.39, down $0.03.
The night before the earnings release, Campbell’s announced that President and CEO Mark Clouse was retiring to become the Team President of the NFL’s Washington Commanders. Its Board of Directors has elected Mick Beekhuizen, currently President of its Meals & Beverage division, to succeed Mr. Clouse.
Since my last report (9/27), Campbell’s stock has fallen 13.6%, including yesterday’s post-earnings 6.4% plunge. By comparison, the S&P 500 is up 5.9%, while the Dow Jones U.S. Food Products Index is down 8.1%. Based upon the drop in CPB’s stock price, I am lowering my 12-month price target from $55 to $50. The price target equates to a one-year forward multiple of 16.0 times projected fiscal 2026 GAAP earnings of $3.13 and 14.7 times non-GAAP earnings of $3.39. (The non-GAAP multiple assumes a reduction of CPB’s discount vs. peers, but to a level still below the peer group average of 15.6). The revised target price represents a potential total return of 20.8%, including the stock’s 3.7% dividend yield. Accordingly, I am raising my performance rating from “2” (Outperform) to “1” (Buy).
This is a summary of my recent report on The Campbell’s Company (CPB) (formerly Campbell Soup Company). To obtain a copy of the report, please reach out to me using the contact information provided below.
December 10, 2024 (Report published on December 5, 2025.)
Stephen P. Percoco
Lark Research
839 Dewitt Street
Linden, New Jersey 07036
(908) 975-0250
admin@larkresearch.com
© 2015-2024 by Stephen P. Percoco, Lark Research. All rights reserved.
This blog post (as with all posts on this website) represents the opinion of Lark Research based upon its own independent research and supporting information obtained from various sources. Although Lark Research believes these sources to be reliable, it has not independently confirmed their accuracy. Consequently, this blog post may contain errors and omissions. Furthermore, this blog post is a summary of a recent report published on this subject and that report provides a more complete discussion and assessment of the risks and opportunities of any investment securities discussed herein. No representation or warranty is expressed or implied by the publication of this blog post. This blog post is for informational purposes only and shall not be construed as investment advice that meets the specific needs of any investor. Investors should, in consultation with their financial advisers, determine the suitability of the post’s recommendations, if any, to their own specific circumstances. Lark Research is not registered as an investment adviser with the Securities and Exchange Commission, pursuant to exemptions provided in the Investment Company Act of 1940. This blog post remains the property of Lark Research and may not be reproduced, copied or similarly disseminated, in whole or in part, without its prior written consent.
You must be logged in to post a comment.