The stock of the food company Campbell’s currently offers a dividend yield of 4.6 percent and is considered attractive. But should investors jump in now or hold off? A comprehensive analysis of the current situation provides insight.
Fundamental Metrics
- Dividend Yield: 4.6 percent – significantly above the average of many growth stocks.
- Price-Earnings Ratio (P/E): 11.3 for the current fiscal year.
- Earnings Per Share (EPS): Target value for the fiscal year is about $3.00 (central estimate), analyst forecast was $2.98.
- Total Return: The sum of the earnings yield (8.8 percent) and the dividend yield results in a total return of around 13.4 percent.
Company Performance
- Q3/2025: Campbell’s surpassed analyst expectations with an EPS of $0.73 compared to a forecast of $0.65. Revenue was also above expectations at $2.48 billion (compared to $2.43 billion).
- Segment Development: The Meals & Beverages segment recorded an organic net revenue increase of six percent; however, the recovery in the snack area was weaker than expected.
- Stock Price: After the earnings release, the stock rose slightly in pre-market trading (+0.73%), but remains close to its yearly low (~$32–33).
Outlook and Risks
- Forecast Confirmed – But at the Lower End of the Range: The management reaffirms the outlook for the fiscal year. However, operating earnings are expected to be at the lower end of the forecast range due to current trade policies and tariffs. Tariffs could lead to a shortfall of about $0.03 to $0.05 per share.
- Revenue Growth: For the full year, revenue growth is forecasted between six and eight percent.
- Stability vs. Weakness in Snack Growth: While broth sales are strong, the company is suffering from a slow recovery in the salty snacks sector.
Analyst Rating
Evercore ISI maintains its “In Line” rating and sets the price target at a steady level: “$41.” The current valuation is considered attractive given the low P/E and high dividend yield.
Conclusion: Scoop It Up or Leave It?
For defensive investors, Campbell’s is interesting:
- High dividend yield combined with a stable dividend payment history (55 years in a row).
- Attractive valuation due to low P/E.
- Solid performance in core segments despite weaknesses in the snack area.
- Risks primarily exist due to: Trade tariffs and uncertain recovery in the snack segment.