Key Takeaways
- Q2 adjusted EPS came in at 51 cents, falling short of the 57-cent consensus estimate
- Revenue declined 4.5% to $2.56 billion, missing forecasts of $2.61 billion
- Snacks division revenue plunged 6.2% to $914 million — the first sub-$1 billion quarter in four years
- Management slashed full-year adjusted EPS forecast to $2.15–$2.25 from $2.40–$2.55
- Shares have plummeted over 40% in 12 months, raising questions about S&P 500 inclusion
Campbell’s latest quarterly results sent shockwaves through the market, with shares tumbling 5.4% in premarket activity Wednesday. The decline pushed the stock toward its weakest level since August 2003.
The food giant’s fiscal Q2 performance fell considerably short of expectations. Adjusted earnings landed at 51 cents per share versus the Street’s 57-cent projection. Revenue totaled $2.56 billion, representing a 4.5% year-over-year drop and missing the anticipated $2.61 billion.
This marked back-to-back quarters of declining sales and the company’s first earnings shortfall since the fourth quarter of fiscal 2023.
Weakness pervaded both major operating segments. The snacks division — encompassing popular brands like Goldfish crackers, Snyder’s of Hanover pretzels, Cape Cod potato chips, and Pepperidge Farm products — saw revenue tumble 6.2% to $914 million. This represents the division’s first time falling below the $1 billion threshold in four years.
The meals and beverages unit, featuring the company’s iconic soup line alongside Prego pasta sauces and V8 beverages, experienced a 3.7% decline to $1.65 billion. While Rao’s premium sauces contributed some positive momentum, it wasn’t sufficient to counterbalance broader segment challenges.
Bottom-line performance deteriorated as well, with net income dropping 16.2% to $145 million.
CEO Mick Beekhuizen addressed the challenging quarter directly: “Given our first half results and the current operating environment, we are lowering our full-year outlook to reflect a more cautious view for the balance of the year,” he stated.
Revised Outlook
Management significantly reduced its fiscal year projections. Organic net sales are now expected to decline 1%–2%, a downgrade from the previous forecast ranging from a 1% decrease to 1% growth. The adjusted EPS guidance saw an even steeper cut to $2.15–$2.25, down dramatically from the earlier $2.40–$2.55 range.
Looking ahead, executives anticipate adjusted earnings will decline 12%–18% in fiscal 2026 compared to the current year, primarily due to tariff-related pressures on steel and aluminum — critical materials for the company’s canned product packaging. Beekhuizen indicated the company would fast-track cost reduction initiatives to “stabilize” its struggling snacks operation.
Campbell’s has set an ambitious goal of achieving $375 million in cost reductions by fiscal 2028.
Index Membership Under Scrutiny
Campbell’s holds the distinction of being an S&P 500 member since the index’s 1957 inception — among approximately 50 founding members that remain today. However, that long-standing position now appears vulnerable.
Shares have cratered more than 40% over the trailing 12-month period, starkly contrasting with the S&P 500’s 21.7% advance during the same timeframe. The company’s market capitalization stood at approximately $7.5 billion prior to the earnings release. Following the premarket selloff, that valuation was poised to contract to roughly $6.96 billion — positioning it as the index’s second-smallest constituent.
Just last Friday, the index committee removed four companies, including Match Group and Molina Healthcare, after they ranked among the smallest members.
Analyst consensus points to a 12-month price target of $28 for CPB shares, representing approximately 12% upside from current levels around $25.
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