Bear of the Day: The Campbell's Co. (CPB)

The Campbell’s Company CPB is struggling with higher inflation and a volatile external environment which is impacting its snack division. This Zacks Rank #5 (Strong Sell) recently missed on earnings and cut its dividend for the first time since 2001.

The Campbell’s Company is a legendary food company which has been headquartered in Camden, N.J. since 1869. It has two divisions: Meals & Beverages and Snacks. The company has 16 brands including Campbell’s, Cape Cod, Chunky, Goldfish, Kettle Brand, Lance, Late July, Pace, Pacific Foods, Pepperidge Farm, Prego, Rao’s, Snack Factory, Snyder’s of Hanover, Swanson and V8.

Campbell’s Missed on Q4 Fiscal 2026 Earnings

On Sep 3, 2026, Campbell’s reported its fourth quarter fiscal 2026 earnings results and missed on the Zacks Consensus Estimate by a penny. Earnings were $0.39 versus the consensus of $0.40.

It has missed on earnings two out of the last four quarters.

Net sales fell 8% to $2.1 billion and decreased 1% on an organic basis with Snacks being the weaker division.

Adjusted gross profit margin fell 190 basis points to 28.6%, driven primarily by cost inflation and other supply chain costs inclusive of the impact from tariffs, but partially offset by supply chain productivity improvements.

“We enter fiscal 2027 with leading brands including Campbell's, Rao's, Goldfish and Pepperidge Farm, a resilient Meals & Beverages division benefiting from durable at-home cooking trends, and actions underway to strengthen Snacks,” said Mick Beekhuizen, CEO.

The First Cut to Campbell’s Dividend Since 2001

In order to accelerate the path to reducing debt on the company’s balance sheet, Campbell’s is “resetting” its dividend to a quarterly dividend of $0.25 per share, or $1.00 on an annualized basis, down from the prior quarter’s dividend of $0.39, which was $1.56 on an annualized basis. That’s a 36% cut.

It’s the first cut to the dividend since 2001.

That brings the yield down to 4.7% from 7.3%. It’s still generous.

Campbell’s Guides Fiscal 2027 Below the Zacks Consensus

Campbell’s expects a volatile external environment and another year of elevated inflation in Fiscal 2027 along with several longer-term benefits that are expected to build through the year to support the company’s margins.

It guided Fiscal 2027 net sales to fall in the range of 4% to 2% from Fiscal 2026.

Earnings are expected to decline as much as 24% in Fiscal 2027 with a range of $1.65 to $1.80.

This guidance range was below the Zacks Consensus of $1.97.

Not surprisingly, the analysts have had to cut their Fiscal 2027 estimates. Four estimates were cut in the last week, which pushed the Zacks Consensus down to $1.91 from $1.97.

That’s still above Campbell’s guidance range.

But the Most Accurate Estimate, which is the most recent, came in at just $1.75, which is within the company’s guidance range of $1.65 to $1.80.

The earnings are going the wrong way. Here’s what it looks like on the 5-year price and consensus chart.

Image Source: Zacks Investment Research

Is the Bottom Already In?

Campbell’s shares lost about 7% on the earnings miss and the announcement of the dividend reset.

Shares have traded near 5-year lows this year and are now down 22.8% year-to-date.

But if you look at the 3-month chart, you can see the shares really aren’t making new lows, even with the latest news.

Image Source: Zacks Investment Research

Could the bottom be in?

Campbell’s is cheap, with a forward price-to-earnings (P/E) of 11.2. A P/E ratio under 15 usually indicates value.

But with earnings expected to slide as much as 24% in Fiscal 2027, it’s more of a value trap than a true value.

For investors interested in food companies like Campbell’s, with all the uncertainty surrounding the consumer and inflation, waiting on the sidelines until the earnings estimates are revised higher is a good strategy.

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This article originally published on Zacks Investment Research (zacks.com).

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