CPB - Campbell Soup: Mixed Q3 Results And Long-Term Debt Reduction Leave Shares Unattractive

2024-06-07 08:00:00 ET

Summary

• Campbell Soup shares have underperformed due to elevated food inflation and constrained consumer sentiment and volumes.
• The acquisition of Sovos Brands will boost sales, but it will take time to reduce debt, limiting investor payouts through 2027.
• The company's snack business is facing headwinds, while its meals unit is benefiting from a shift towards cooking at home, which have largely offset.

Shares of Campbell Soup ( CPB ) have been a poor performer over the past year, losing 15%, as elevated food inflation has weighed on consumer sentiment and volumes. While its acquisition of Sovos Brands will boost sales, it will take time to reduce debt back to targeted levels, meaning investor payouts are likely to be constrained. Given we are likely four years away from share repurchases and several years from dividend growth, CPB is likely to be dead money in my view....

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