Packaged food company Campbell's (NASDAQ:CPB) fell short of the market’s revenue expectations in Q4 CY2024, but sales rose 9.3% year on year to $2.69 billion. Its non-GAAP profit of $0.74 per share was 2.2% above analysts’ consensus estimates.
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Campbell's (CPB) Q4 CY2024 Highlights:
- Revenue: $2.69 billion vs analyst estimates of $2.73 billion (9.3% year-on-year growth, 1.8% miss)
- Adjusted EPS: $0.74 vs analyst estimates of $0.72 (2.2% beat)
- Adjusted EBITDA: $418 million vs analyst estimates of $481.8 million (15.6% margin, 13.2% miss)
- Management lowered its full-year Adjusted EPS guidance to $3 at the midpoint, a 5.4% decrease
- Operating Margin: 12.2%, in line with the same quarter last year
- Free Cash Flow Margin: 15.3%, similar to the same quarter last year
- Organic Revenue fell 2% year on year (-1% in the same quarter last year)
- Sales Volumes were flat year on year (-2% in the same quarter last year)
- Market Capitalization: $12.02 billion
Company Overview
With its iconic canned soup as its cornerstone product, Campbell's (NASDAQ:CPB) is a packaged food company with an illustrious portfolio of brands.
Shelf-Stable Food
As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
Sales Growth
Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years.
With $10.12 billion in revenue over the past 12 months, Campbell's is one of the larger consumer staples companies and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when your existing brands have penetrated most of the market. To accelerate sales, Campbell's must lean into pricing or new products.
As you can see below, Campbell’s 6.8% annualized revenue growth over the last three years was mediocre as consumers bought less of its products. We’ll explore what this means in the "Volume Growth" section.
This quarter, Campbell’s revenue grew by 9.3% year on year to $2.69 billion, missing Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 3.8% over the next 12 months, a slight deceleration versus the last three years. This projection doesn't excite us and indicates its products will see some demand headwinds.
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Volume Growth
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
To analyze whether Campbell's generated its growth (or lack thereof) from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.
Over the last two years, Campbell’s average quarterly sales volumes have shrunk by 2.3%. This isn’t ideal for a consumer staples company, where demand is typically stable. Luckily, Campbell's was able to offset fewer customers purchasing its products by charging higher prices, enabling it to maintain its organic sales. We hope the company can grow its volumes soon, however, as consistent price increases (on top of inflation) aren’t sustainable over the long term unless the business is really really special.
In Campbell’s Q4 2025, year on year sales volumes were flat. This result was a well-appreciated turnaround from its historical levels, showing the company is heading in the right direction.
Key Takeaways from Campbell’s Q4 Results
We struggled to find many positives in these results. The company's organic revenue fell short of Wall Street’s estimates and full-year EPS was lowered. Overall, this was a softer quarter. The stock traded down 5.3% to $38.20 immediately after reporting.
Campbell’s latest earnings report disappointed. One quarter doesn’t define a company’s quality, so let’s explore whether the stock is a buy at the current price. We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.
