Key Points
Campbell’s (NASDAQ: CPB) isn’t merely a red-and-white-label soup business any longer. The company’s diversified portfolio now covers snacks, sauces, and various meal brands.
Campbell’s has also made significant investments in artificial intelligence, data, and insights to better understand shoppers’ shifting habits and preferences. The company’s stock is deeply undervalued and down 20% this year. Investors should take notice.
Campbell’s is refocusing
Campbell’s management is being strategic in its acquisitions to boost its business while cutting costs to protect delicate margins. Most notably, Campbell’s purchased the increasingly popular pasta sauce brand Rao’s in 2024 for $2.7 billion. A wide-ranging portfolio and technological advancements could set the food business up for substantial growth in the coming years.
This isn’t a plan without real challenges. Consumers are finicky, and there is real pressure on margins throughout the industry. Still, Campbell’s is taking the corrective measures needed to succeed going forward. Net sales in the third quarter of fiscal 2026 decreased 4%. There may still be some short-term pain ahead, but I like the company’s approach to gaining forward momentum.
Campbell’s is currently trading slightly above $20 per share. Its forward and trailing P/E ratios are about 11, and PEG is below 1. These metrics suggest Campbell’s is an attractive buy at the moment if the company can successfully execute its strategic plan to control costs and grow its portfolio. The company also pays a quarterly cash dividend of $0.39 per share, yielding over 7% at the current price.
There will continue to be short-term headwinds for Campbell’s as consumers’ wallets are strained, but the approach the company is taking to preserve its future as an iconic consumer staple is the right one.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool recommends Campbell’s. The Motley Fool has a disclosure policy.
