Reasonable Price-to-Sales Ratio
Strong Gross Profit Margin
Decent Operating Profit Margin
Interest Coverage Ratio
Strong Leadership Brands
Successful Sovos Integration
Solid Financial Management
Positive Consumer Trends
Innovation and Marketing Investments
Strategic Focus on Premium Segments
High Price-to-Earnings Ratio
Low Net Profit Margin
Average Return on Equity
High Debt Levels
Liquidity Concerns
Organic Sales Challenges
Competitive Pressure in Snacks
Uncertain Market Conditions
Potential Margin Compression
Overall, Campbell's Company demonstrates a solid business model supported by strong leadership brands and effective integration of acquisitions. However, challenges in organic sales and competitive pressure in certain segments pose risks to future growth. The company is well-positioned for potential recovery, but must navigate a dynamic market environment and maintain discipline in pricing and promotional strategies.
Analysis Date: December 4, 2024
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$36.63
Current Market Price: $38.81
IV/P Ratio: 0.94x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
-6.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for CPB
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (22.19)
P/B ratio ≤ 1.5 (2.96)
Current ratio ≥ 2.0 (0.93x)
Long-term debt < Net current assets (-28.00x)
Margin of safety (-6.0%)
CPB does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
With a gross profit margin of 30.29%, CPB exhibits strong profitability at the gross level, indicating effective cost management relative to sales.
The operating profit margin of 10.36% reflects a reasonable ability to generate profit from operations, which is favorable for investors.
The net profit margin of 3.44% is relatively low, indicating that a smaller proportion of revenue is converted into actual profit, which could concern investors about earnings quality.
A return on equity of 9.02% suggests that the company is generating modest returns for shareholders, which may not be sufficient to attract growth-focused investors.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
13.48%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
0.00%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
30.29%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
3.44%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
An interest coverage ratio of 4.33 indicates that the company can comfortably meet its interest obligations, reflecting good financial stability.
With a debt-to-equity ratio of 1.96 and a debt-to-assets ratio of 48.24%, CPB is highly leveraged, which poses risks in times of economic downturns.
Current and quick ratios below 1 (0.93 and 0.55 respectively) indicate potential liquidity issues, suggesting the company may struggle to meet short-term obligations.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
1.96x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q2 2025
Current Ratio
Current assets divided by current liabilities
0.93x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q2 2025
Campbell's has successfully established 16 Leadership Brands that dominate their respective categories, showing dollar consumption growth and positive share performance. This provides a robust portfolio that drives overall company performance.
The integration of Sovos Brands, particularly the Rao's brand, has exceeded expectations, contributing significantly to net sales and enhancing the Meals & Beverages division's performance.
Campbell's has demonstrated strong financial discipline, with plans for cost savings and a commitment to returning cash to shareholders through dividends and share repurchases.
Organic net sales were down 1%, indicating struggles in certain segments due to inventory movements and a dynamic consumer environment, which could affect long-term growth.
The Snacks division has experienced declining organic net sales and margin pressure, particularly from new entrants and private label products, which could threaten profitability.
There is an anticipated recovery in consumer confidence and food volumes, which may support future growth for Campbell's, particularly in their Leadership Brands.
Planned increases in marketing and innovation efforts, especially during the crucial holiday season, are expected to drive sales and market share growth.
Campbell's is focusing on premium products like Rao's that are gaining traction among younger demographics, indicating potential for future market expansion.
The broader food industry is experiencing pressures that could impact Campbell's growth trajectory, with some analysts projecting below-algorithm growth for the next year.
Continued pressure on margins due to inflation and competitive pricing in the Snacks segment may hinder profitability if not managed effectively.