What a brutal six months it’s been for Campbell's. The stock has dropped 25.7% and now trades at $20.57, rattling many shareholders. This might have investors contemplating their next move.
Is now the time to buy Campbell's, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Campbell's Will Underperform?
Even with the cheaper entry price, we don’t have much confidence in Campbell's. Here are three reasons why there are better opportunities than CPB, plus one stock we’d rather own.
1. Demand Slipping as Sales Volumes Decline
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.
Campbell’s average quarterly sales volumes have shrunk by 1.6% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable. 
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Campbell’s revenue to drop by 2.1%, a decrease from This projection is underwhelming and suggests its products will see some demand headwinds.
3. EPS Trending Down
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Sadly for Campbell's, its EPS declined by 7.8% annually over the last three years while its revenue grew by 2.3%. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Campbell's doesn’t pass our quality test. Following the recent decline, the stock trades at 10.8× forward P/E (or $20.57 per share). While this valuation is reasonable, we don’t see a big opportunity at the moment. There are better investments elsewhere. We’d recommend looking at one of Charlie Munger’s all-time favorite businesses.
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