Campbell’s SWOT analysis: stock faces headwinds amid snacks division woes

The Campbell Soup Company (NYSE:CPB) finds itself navigating a challenging market landscape as it grapples with underperformance in its snacks division and faces potential headwinds from external factors. With current revenue of $10.25 billion and EBITDA of $1.89 billion in the last twelve months, recent analyst reports paint a picture of a company striving to maintain its market position while addressing various operational and market-related challenges. According to InvestingPro data, nine analysts have recently revised their earnings estimates downward for the upcoming period.

Financial Performance and Guidance

Campbell’s recent financial performance has been a mixed bag, with the company facing pressure on both its top and bottom lines. Despite maintaining a 6.4% revenue growth over the last twelve months, in its fiscal second quarter of 2025, the company reported a bottom-line beat, but this was overshadowed by a top-line miss and a downward revision in its fiscal year 2025 guidance. The company’s gross profit margin stands at 30.73%, while analysts attribute the challenges primarily to softness in snacking categories, which did not improve as expected.

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The company’s earnings per share (EPS) forecasts have been subject to revisions. For the fiscal year 2026 (FY26), analysts have lowered their EPS estimates from $3.20 to $3.08, citing downside risks. This adjustment reflects growing concerns about the company’s ability to navigate the challenging food industry landscape and maintain growth in key segments.

Market Challenges and Competition

Campbell’s is operating in an increasingly competitive environment, particularly in its snacks division. The salty snacks market remains intensely competitive, and the company is facing growing competition in the cookies and crackers segments as well. This heightened competition is putting pressure on Campbell’s market share and profitability in these key product categories.

Analysts note that the overall food industry landscape remains challenging, contributing to a cautious outlook for Campbell’s. The company’s ability to differentiate its products and maintain strong brand loyalty in this competitive environment will be crucial for its future performance.

Snacks Division Performance

The snacks division has been a particular area of concern for Campbell’s. Analysts report that the division’s recovery has been slower than expected, significantly impacting the company’s overall performance. This underperformance in snacks was a primary driver behind the downward revision of Campbell’s fiscal year 2025 EPS guidance.

The slower-than-anticipated stabilization in the Snacks division is seen as a critical factor in the company’s recent struggles. Analysts suggest that if 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.

Rao’s Brand Trends

While the snacks division faces challenges, there are also concerns about the performance of key brands in other segments. Notably, analysts have observed a slowdown in consumption trends for the Rao’s brand, which is a significant contributor to the overall Meals & Beverage segment growth.

This deceleration in Rao’s consumption is particularly noteworthy given the brand’s importance to Campbell’s portfolio. The company’s reliance on Rao’s for a substantial portion of segment growth could pose risks if the brand’s performance continues to soften.

Acquisition and Integration of SOVO

On a more positive note, Campbell’s has been making strategic moves to strengthen its portfolio. The company recently acquired SOVO, which is expected to be integrated into the organic base of the company. This acquisition could potentially bring new avenues for growth and diversification within Campbell’s product portfolio.

The successful integration of SOVO and its impact on Campbell’s overall performance will be closely watched by analysts and investors alike. It represents an opportunity for the company to offset some of the challenges faced in other areas of its business.

Impact of EU Tariffs and Steel Costs

External factors are also playing a role in shaping Campbell’s outlook. Analysts have highlighted potential headwinds from EU tariffs on imported tomato sauce from Italy, which could pose an 8-9% EPS risk if resumed. Additionally, the company’s exposure to steel costs, potentially affected by tariffs, is noted as another area of concern.

These external factors add an element of uncertainty to Campbell’s financial projections and underscore the importance of the company’s ability to manage costs and navigate regulatory challenges effectively.

Bear Case

How might continued weakness in the snacks division impact CPB’s overall performance?

The persistent underperformance of Campbell’s snacks division poses a significant risk to the company’s overall financial health. As a key contributor to the company’s revenue and growth, continued weakness in this segment could lead to further downward revisions in earnings guidance and potentially impact investor confidence.

The snacks division’s struggles are not merely a short-term concern but could indicate deeper issues with product positioning or market strategy. If Campbell’s fails to address these challenges effectively, it may lose market share to competitors and see a sustained decline in profitability. This could, in turn, limit the company’s ability to invest in innovation and marketing across its entire product portfolio, potentially creating a cycle of underperformance.

What risks does CPB face from potential EU tariffs and rising steel costs?

The potential implementation of EU tariffs on imported tomato sauce from Italy presents a significant threat to Campbell’s profitability. Analysts estimate that these tariffs could pose an 8-9% risk to the company’s EPS if resumed. This impact could be particularly severe given that Campbell’s is already facing challenges in other areas of its business.

Additionally, the company’s exposure to steel costs is a concern, especially in an environment where tariffs may drive up prices. Rising input costs could squeeze margins across Campbell’s product lines, particularly if the company is unable to pass these increases on to consumers in a competitive market. This combination of potential tariffs and rising material costs creates a challenging environment for maintaining profitability and could necessitate cost-cutting measures that might further impact the company’s competitive position.

Bull Case

How could the integration of SOVO benefit CPB’s growth prospects?

The acquisition and integration of SOVO into Campbell’s organic base presents a significant opportunity for growth and diversification. SOVO’s product line could potentially complement Campbell’s existing portfolio, allowing the company to expand its presence in the growing organic and health-focused food segments.

Successful integration of SOVO could provide Campbell’s with new revenue streams and help offset challenges faced in other areas of the business, such as the snacks division. It may also offer opportunities for cross-selling and leveraging existing distribution channels, potentially improving overall operational efficiency. Moreover, this acquisition demonstrates Campbell’s commitment to evolving its product offerings to meet changing consumer preferences, which could enhance its long-term market position and appeal to a broader customer base.

What opportunities exist for CPB to improve its market position in the competitive snacks industry?

Despite current challenges, the snacks industry remains a high-growth segment with significant potential. Campbell’s has the opportunity to leverage its established brand presence and distribution networks to revitalize its snacks division. By focusing on innovation in product development, such as introducing healthier options or unique flavor profiles, Campbell’s could differentiate itself in the crowded snacks market.

Additionally, the company could explore strategic partnerships or targeted acquisitions to strengthen its position in specific snack categories. Investing in marketing and promotional activities to reinforce brand loyalty and attract new consumers could also help Campbell’s regain market share. By addressing the evolving preferences of consumers, particularly in terms of convenience and health-consciousness, Campbell’s has the potential to turn its snacks division into a growth driver once again.

SWOT Analysis

Strengths:

• Strong brand recognition, particularly with Rao’s
• Diverse product portfolio across multiple food categories
• Established distribution networks and market presence

Weaknesses:

• Underperforming snacks division
• Reliance on key brands like Rao’s for segment growth
• Vulnerability to input cost fluctuations, such as steel prices

Opportunities:

• Integration of SOVO acquisition for growth in organic segment
• Potential for innovation in snacks division to regain market share
• Expansion into health-focused and premium food categories

Threats:

• Intense competition in snacks market
• Potential EU tariffs on imported tomato sauce
• Rising input costs, particularly steel
• Changing consumer preferences and eating habits

Analysts Targets

• Barclays: $30.00 (September 5th, 2025)
• Piper Sandler: $42.00 (May 23rd, 2025)
• D.A. Davidson: Neutral (March 6th, 2025)

This analysis is based on information available up to September 17, 2025.

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