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Campbell Soup Co CPB Stock Quote

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Morningstar‘s Stock Analysis CPB

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Campbell Slumps After Q4 on Concerns Around Competition, Rendering Shares a Touch Undervalued

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

In our view, the market had little concern for wide-moat Campbell’s seasonally small July-ended fourth quarter (6% organic sales growth and 40 basis points of adjusted gross margin expansion to 31.3% despite an 810-basis-point drag from higher commodity costs), hankering instead for perspective on the competitive and macro landscape. And in this context, we think management expressed some caution, citing increased trade down to lower-priced private-label fare (particularly in condensed soup and broth) and stepped-up promotional spend (relative to the depressed levels that have been customary since COVID-19 hit). Further, Campbell foresees continued inflationary angst, amounting to a low-teens rate in fiscal 2023 on top of the 11% absorbed in fiscal 2022. However, we never anticipated that consumers would continue to digest the rash of price hikes across the grocery store without a bit of indigestion, nor did we posit promotions were a thing of the past. We also surmise that Campbell is pursuing multiple avenues through which to withstand inflation (increasing prices, extracting inefficiencies, and altering price/packs), which we see as prudent.

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Company Profile CPB

Business Description

With a history that dates back around 150 years, Campbell Soup is now a leading manufacturer and marketer of branded convenience food products, most notably soup. The firm's product assortment includes well-known brands like Campbell's, Pace, Prego, Swanson, V8, and Pepperidge Farm. Following the sale of its international snacking operations, which wrapped in calendar 2019, the firm derives nearly all of its sales from its home turf. Campbell has made a handful of acquisitions to reshape its product mix the past few years, including the tie-up with Snyder's-Lance (completed in March 2018), which enhances its exposure to the faster-growing on-trend snack food aisle, complementing its Pepperidge Farm lineup.

1 Campbell Place
Camden, NJ, 08103-1799
T +1 856 342-4800
Industry Packaged Foods
Most Recent Earnings Jul 31, 2022
Fiscal Year End Jul 31, 2023
Employees 14,700