American Staple Drops To 20-Year Low
Fighting in the Middle East is getting all of the attention.
It makes sense.
The price of oil is jumping up and down based on the conflict.
When the price of oil jumps higher, the stock market crashes, and the opposite happens when the price of oil drops.
So it deserves a lot of attention from investors.
But there’s a lot more going on.
Companies are releasing their earnings results, and one company had a stinker.
The Campbell’s Company (ticker: CPB) released earnings Wednesday morning and they were disappointing.
Campbell’s reported earnings per share (EPS) of $0.52 for the 2nd quarter, missing the expected $0.57 from analysts.
But missing on earnings wasn’t the worst part.
Campbell’s management lowered its expected 2026 EPS from $2.47 down to $2.10.
Last year, Campbell’s EPS was $2.90, so the 2026 figure is expected to drop over 20%.
Campbell’s is in a really tough spot.
Tariffs are eating away at the company’s profits.
And revenues are declining as customers switch to cheaper alternatives, especially for snacks.
If you’re a Campbell’s investor, the last 18 months have been awful with the stock dropping over 50%.
The last time Campbell’s was trading below $22 was back in 2003!
So is Campbell’s a sinking ship we should avoid…or is now a great buy-low opportunity?
Let’s dig more into the company.
Campbell’s is much more than soup and owns some extremely popular food brands including Goldfish, Prego, Swanson, and Snyder’s.
As prices rise, Campbell’s is forced to raise its own prices, which is hurting sales volumes.
In Campbell’s earnings call for the 2nd quarter, management mentioned lowering prices to help bring back customers.
Management also said it’s stopping its share buyback as well as halting dividend increases.
It’s a lot to turn Campbell’s around, but there’s opportunity here.
Campbell’s brands are some of the best around.
Margins will fall as the company lowers prices to get more competitive.
But Campbell’s has a lot of room before it starts losing money.
Campbell’s profit margin of 5.7% is much higher than some of its peers in the packaged foods industry.
Campbell’s stock price is also incredibly cheap.
Its price-to-sales (PS) ratio of 0.7x is at an all-time low and is well below other packaged food companies.
The risks are certainly there.
Campbell’s is struggling and a turnaround isn’t guaranteed.
But I really like Campbell’s brands and the stock is just too cheap to look the other way.
What other stocks are you looking to buy?
Coach Parker
Category: Stocks
