Campbell’s SWOT analysis: stock faces headwinds amid snacks slowdown

The Campbell Soup Company (NYSE:NASDAQ:CPB) is navigating a challenging landscape as it grapples with slower-than-expected recovery in its snacks division and faces potential headwinds from tariffs and intense competition. The company’s stock has fallen significantly over the last three months, according to InvestingPro data, with year-to-date returns down nearly 35%. As the company approaches the end of its fiscal year 2025, analysts are closely monitoring its performance and adjusting their outlooks accordingly.

Financial Performance and Outlook

Campbell’s financial performance has been mixed in recent quarters, with the company facing several challenges that have impacted its bottom line. Despite these challenges, InvestingPro data shows the company remains profitable with last twelve months revenue of $10.22 billion and EBITDA of $1.85 billion. Current analysis suggests the stock is trading below its Fair Value, making it potentially attractive for value investors. Analysts have lowered their earnings per share (EPS) estimates for fiscal year 2026 (FY26) in response to weaker-than-expected guidance from competitors in the packaged food industry.

The company is expected to provide its initial FY26 guidance when it reports its fourth-quarter fiscal year 2025 results in late August or early September. Current estimates suggest an EPS of $2.91 for FY25, with a decrease to $2.50 projected for FY26.

Campbell’s is facing several year-over-year headwinds that are likely to affect its performance in the coming fiscal year. These include the planned reinstatement of incentive compensation, the potential impact of tariffs, and an anticipated increase in brand spending aimed at boosting volume trends.

Market Challenges and Competition

The competitive landscape in the salty snacks market remains intense, with Campbell’s experiencing increasing competition in the cookies and crackers segments as well. Despite these challenges, the company maintains strong fundamentals with a healthy gross profit margin of 30.6% and has demonstrated its commitment to shareholder returns through 55 consecutive years of dividend payments, currently yielding an attractive 5%. This competitive pressure has contributed to the slower-than-expected recovery in the company’s snacks division, which has been a primary factor in the downward revision of FY25 EPS guidance.

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Analysts note that if the consumer recovery extends beyond the second quarter of fiscal 2025, Campbell’s might lean towards the lower end of its sales and EPS guidance for the year. This adjustment in guidance is perceived to align with current investor expectations, suggesting a cautious sentiment in the market regarding the company’s near-term performance.

Product Portfolio and Brand Performance

Campbell’s product portfolio, particularly its Rao’s brand, has been a significant contributor to the company’s Meals & Beverage segment growth. However, recent analysis indicates a weakening in growth trends for Rao’s, which could pose challenges for the company’s overall performance.

The reliance on a single brand for a substantial portion of segment growth presents risks if that brand underperforms. Analysts are closely monitoring the performance of Rao’s and its impact on Campbell’s financial results.

Strategic Initiatives and Acquisitions

In an effort to diversify its product portfolio and drive growth, Campbell’s has made strategic moves such as the acquisition of SOVO. The integration of SOVO into the company’s organic base is expected to bring new avenues for growth and diversification within Campbell’s product lineup.

The success of this integration and its impact on Campbell’s overall performance will be crucial in determining the company’s future trajectory. Analysts will be watching closely to see how effectively the company leverages this acquisition to offset challenges in other areas of its business.

Analyst Perspectives

The majority of recent analyst ratings for Campbell’s stock have been cautious, with several firms maintaining an "Underweight" rating. However, there is some divergence in opinion, with at least one firm maintaining an "Overweight" rating.

Analysts cite concerns about the company’s ability to navigate through competitive pressures and the potential impact of external factors such as tariffs. The slower-than-expected recovery in the snacks division and the reliance on key brands like Rao’s for growth are also factors contributing to the cautious outlook.

Bear Case

How might prolonged difficulties in the snacks division impact CPB’s overall performance?

The snacks division has been a significant concern for Campbell’s, with its slower-than-expected recovery weighing heavily on the company’s financial outlook. If these difficulties persist, it could lead to further downward revisions in earnings estimates and potentially impact the company’s market share in key product categories.

The competitive pressure in the salty snacks, cookies, and crackers segments may continue to challenge Campbell’s ability to regain lost ground. This could result in sustained underperformance in a division that is crucial to the company’s overall growth strategy.

What risks does CPB face if EU tariffs on imported tomato sauce are implemented?

The potential implementation of EU tariffs on imported tomato sauce from Italy poses a significant risk to Campbell’s. Analysts estimate that these tariffs could result in an 8-9% EPS risk if resumed. Given the importance of tomato-based products in Campbell’s portfolio, particularly for brands like Rao’s, such tariffs could have a material impact on the company’s profitability.

Additionally, Campbell’s exposure to steel costs, which could also be affected by tariffs, presents another area of concern. The combination of these factors could put pressure on the company’s margins and necessitate price increases, potentially affecting consumer demand for its products.

Bull Case

How could successful brand spending and strategic initiatives improve CPB’s volume trends?

Campbell’s has indicated plans to increase brand spending to boost volume trends. If executed effectively, this strategy could help reinvigorate growth across the company’s product portfolio. Successful marketing campaigns and product innovations could drive consumer engagement and potentially recapture market share in competitive segments.

Moreover, strategic initiatives focused on adapting to changing consumer preferences and health trends could position Campbell’s favorably in the evolving food industry landscape. By aligning its product offerings with consumer demands for healthier, more convenient options, the company could tap into new growth opportunities and improve its overall volume trends.

What potential does the integration of SOVO have for diversifying CPB’s product portfolio?

The acquisition and integration of SOVO represent a significant opportunity for Campbell’s to diversify its product portfolio and potentially offset challenges in other areas of its business. SOVO’s integration could bring new product lines, technologies, or market access that complement Campbell’s existing offerings.

If successfully leveraged, this acquisition could help Campbell’s expand into new market segments, reach different consumer demographics, or introduce innovative products that drive growth. The diversification of revenue streams could also help mitigate risks associated with underperformance in any single product category or brand.

SWOT Analysis

Strengths:

• Strong brand portfolio including Rao’s
• Recent acquisition (SOVO) for potential growth
• Established presence in the packaged food industry

Weaknesses:

• Slower than expected recovery in snacks division
• Reliance on Rao’s for significant segment growth
• Challenges in meeting guidance numbers

Opportunities:

• Potential for successful brand spending to improve volume trends
• Integration of SOVO acquisition for portfolio diversification
• Expansion into healthier and more convenient food options

Threats:

• Intense competition in salty snacks, cookies, and crackers segments
• Potential EU tariffs on imported tomato sauce
• Consumer spending slowdown affecting overall food industry
• Exposure to fluctuations in steel costs

Analysts Targets

• Barclays (LON:BARC): $30.00 (Underweight) - July 14th, 2025
• Barclays: $35.00 (Underweight) - June 13th, 2025
• Piper Sandler: $42.00 (Overweight) - May 23rd, 2025
• Barclays: $40.00 (Underweight) - March 12th, 2025
• D.A. Davidson: (Neutral) - March 6th, 2025
• Evercore ISI: (Tactical Underperform) - January 7th, 2025

This analysis is based on information available up to July 18, 2025.

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