Valuation Scorecard: Stock Rating D-Negative (4/10/24)-Campbell Soup Co (CPB).

As reflected at the current price of $44, what future Campbell Soup operating performance is the market anticipating? To achieve average annual stock market performance of 9.0% over the next 6 years, Campbell Soup shares will need to reach $73. Upper quartile performance will require a $86 Campbell Soup stock price by 2029.

Executive Summary

• Price Target Research identifies Campbell Soup as having: high stability, above average expected growth, above average financial strength, and low profitability. A big positive influence on Campbell Soup’s valuation is its superior Risk Profile.
• High valuation, below market shareholder returns. Current valuation levels are high relative to the Campbell Soup Peer Group. Recent market returns have underperformed the Campbell Soup Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, Campbell Soup shares should reach a level of $38 by 2029 — an 1.5% per year total shareholder return. A 2029 stock price of $73 would reflect median performance and a price of $86 would be required to reach upper quartile performance.
• Historical growth has been average relative to the Campbell Soup Peer Group and forecasted growth is relatively average. Campbell Soup’s historical income statement and balance sheet growth are not available. Campbell Soup’s consensus growth expectations are in line with past growth.
• Pretax ROA is group leading. This factor has strengthened market perceptions of Campbell Soup. The company has below average cash and will have to work to generate attractive investment opportunities and improve valuation.
• Risk Profile has been Campbell Soup’s biggest valuation strength. Campbell Soup’s risk profile is very favorable. Overall variability has been very low with very low revenue variability, only average E.P.S. variability, and very low stock price volatility. Financial Strength is only average and earnings’ expectations are relatively high. The debt/capital ratio has declined very significantly.

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