The Campbell’s Company (CPB) reported 25Q3 diluted GAAP EPS of $0.22, compared with last year’s $0.45 and my estimate of $0.57. The shortfall was due primarily to an impairment charge taken against its Late July chips business and lower than projected profitability in the Meals & Beverages (M&B) and Snacking businesses. Non-GAAP EPS of $0.74 was below 24Q3’s $0.76, but matched my estimate. Net sales were $2.48 billion, up 4.5% from 24Q3, due to the Sovos Brands acquisition and 1% growth in organic net sales.
The results exceeded management’s expectations. M&B benefits from consumers who continue to seek ways to stretch their food budgets by cooking at home. In broths, Campbell’s scored a 15% increase in dollar consumption, more than twice the industry average, and gained 3 points of market share. Soup saw a 4% increase in dollar consumption and 0.4 points of share. Condensed cooking soups volume growth was the highest for Q3 in four years.
Snacking faces continued competitive pressure, as consumers have scaled back spending and become more selective. The business saw declines of 5% in volume and 3% in dollar consumption. Organic sales fell 5%. However, the performance of individual categories was mixed, as fresh bakery and cookies held share, while pretzels, chips and crackers lost share. Campbell’s has put in place brand-specific action plans to address its challenges and regain share.
As a result of 25Q3 results and its outlook, management reaffirmed its fiscal 2025 adjusted EPS guidance, but said that earnings would likely come in at the low end of its guidance range of $2.95-$3.05. Most of the shift toward the low end is due to the expected $0.03-$0.05 headwind from tariff costs. (It cautions against annualizing the 25Q4 tariff costs, given the uncertainty that still exists in tariff implementation and its own efforts to mitigate their impact.)
My projections anticipate fiscal 2025 GAAP EPS of $2.06 (down from $2.37 previously) and non-GAAP adjusted EPS of $2.95 (down from $3.00). For fiscal 2026, I now show GAAP EPS of $2.51 (down from $2.99) and non-GAAP EPS of $3.10 (down from $3.25).
Since my last report (4/10), Campbell’s stock has fallen 14.3%, slightly better than the S&P 500’s 9.5% gain and Dow Jones U.S. Food Products Index’s 4.1% price decline. The stock remains in a downtrend, with only tentative signs of stabilizing. Based upon the share price decline, I am lowering my 12-month price target from $45 to $40. The revised price target equates to one-year forward multiples of 13.9 times projected fiscal 2026 GAAP earnings of $2.84 and 12.8 times non-GAAP earnings of $3.10. (The non-GAAP multiple assumes that CPB’s discount vs. peers will narrow, but to a level still below the peer group average of 15.6.) The revised target price equates to a potential total return of 27%, including its 5.0% dividend yield. Thus, I am maintaining my performance rating of “1” (Buy).
This is a summary of Lark Research’s recent report on The Campbell’s Company (CPB). To obtain a copy of the report, please reach out to Steve Percoco using the contact information provided below.
June 20, 2025 (Report published on June 15, 2025.)
Stephen P. Percoco
Lark Research
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© 2015-2025 by Stephen P. Percoco, Lark Research. All rights reserved.
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