Financials
Financials - What the Numbers Say
Financials in One Page
The Campbell's Company is a $10B-revenue branded packaged-foods business that earns roughly 30% gross margins and a high-single-digit free-cash-flow margin. Top-line growth in FY2025 (+6%) came almost entirely from the March 2024 Sovos (Rao's) acquisition; organic sales were essentially flat and the Snacks segment is in a four-quarter contraction. Cash conversion is still healthy — FCF has run above net income for three of the last four years — but the balance sheet is now stretched (net debt / EBITDA ~4.3x, Fitch downgrade to BBB- in February 2026), interest coverage has compressed below 4x, and ROIC has fallen from 16% in FY2017 to ~6.6% today as goodwill from Snyder's-Lance and Sovos buried capital. The market has reacted: the stock is down ~38% over the last twelve months, P/E has compressed to ~11x and dividend yield is 7.7% — multi-year lows. The single financial metric that matters most right now is Snacks segment operating margin — it carries roughly a third of segment EBIT and is the swing factor for whether FY2026 EBITDA stabilizes or breaks lower.
Revenue (TTM, $M)
Operating Margin (TTM)
Free Cash Flow FY25 ($M)
Net Debt / EBITDA (FY25)
ROIC (FY25)
P/E (TTM)
EV / EBITDA (TTM)
Dividend Yield
The financial story in one line: cash flow is fine, the balance sheet is not. Leverage at 4.3x has converted CPB from a defensive compounder into a deleveraging story — and the market is pricing it accordingly with a 7.7% dividend yield.
A quick glossary for terms used throughout this page:
- Operating margin is operating income (sales minus all operating costs, before interest and taxes) divided by revenue. A measure of "how much of every dollar of sales becomes profit before financing decisions."
- Free Cash Flow (FCF) is operating cash flow minus capital expenditures — cash actually available to pay down debt, repurchase stock, or fund acquisitions.
- Net Debt / EBITDA is total debt minus cash, divided by earnings before interest, taxes, depreciation and amortization. The standard credit-leverage gauge — investment-grade packaged food typically sits near 2.5-3.0x, sub-3.0x is comfortable, above 4.0x is stressed.
- ROIC (Return on Invested Capital) is after-tax operating profit divided by debt + equity (net of cash). The single best test of whether a business creates value above its cost of capital (typically ~7-9% for a packaged-food name).
Revenue, Margins, and Earnings Power
How does revenue become profit at Campbell's? Sales are dominated by Meals & Beverages (Campbell's soup, Pace, Prego, Swanson, V8, Rao's) and Snacks (Goldfish, Pepperidge Farm, Snyder's, Lance, Cape Cod). Gross margin sits in the high-20s to low-30s — typical of a branded, retail-distributed packaged-food model with meaningful trade promotion, freight, and ingredient inflation. Below the gross line, marketing and admin run roughly 18-19% of sales, leaving operating margins in the 10-12% band today versus 14-17% in the mid-2010s.
Twenty-year revenue and operating income
Top-line shape over twenty years: revenue is ~45% larger than 2005 but the path is jagged — the Snyder's-Lance acquisition (FY2018) added roughly $2B, the international/refrigerated divestitures (FY2017-2019) subtracted ~$2.5B, and the Sovos acquisition (March 2024) is now layering in another $0.8-1.0B annualized. Underlying organic growth has been ~1-2% per year — barely keeping up with food inflation. Operating income has fallen despite a larger revenue base, which is the central tension on this page.
Margin structure over time
Three things stand out. First, gross margin has lost roughly 4 percentage points since FY2017 — input inflation, freight, and Sovos mix dilution have not been fully offset by productivity savings. Second, the FY2017 spike to a 25% operating margin reflects the divestiture of low-margin international and refrigerated soup businesses; that was a one-time mix benefit, not a sustainable run-rate. Third, the net-margin spikes in FY2020 and FY2021 reflect non-operating items (gain on sale of Campbell Fresh businesses); strip those and underlying net margin has been compressing for three years.
Recent quarterly trajectory
The quarterly view shows the Sovos contribution clearly: Q1 FY2024 onwards reflects ~$200M/quarter incremental Rao's revenue. But the margin line is concerning — Q3 FY2025 (6.5%) and Q4 FY2024 (3.4%) include charges, and Q2 FY2026 (March 2026) printed only 10.6% on a 5% sales decline blamed on storm disruption, snacks weakness, and tariff-related cost inflation. Per the Q2 FY2026 print, gross margin fell to 28.0% from 30.5%, adjusted EBIT dropped 24%, and adjusted EPS dropped 31% to $0.51. Earnings power is currently deteriorating, not stabilizing.
Cash Flow and Earnings Quality
Earnings quality is the single best feature of Campbell's financial profile. For all the operating-margin disappointments, the company has converted reported earnings into cash at a rate above 1.0x for most of the last decade, helped by depreciation and amortization (now ~$430M/year) running well above maintenance capex needs.
Net income vs. operating cash flow vs. free cash flow
Net income has bounced around because of impairments (FY2018-2019), divestiture gains (FY2020), and inflation (FY2024-2025). Operating cash flow has been remarkably stable in a $1.0-1.4B range. In FY2024 and FY2025, FCF (~$700M) exceeded net income (~$600M) — non-cash D&A and amortization of acquired intangibles are flattering cash flow versus reported EPS. That gap is real and supportive, but it depends on D&A continuing to outrun maintenance capex; if management has to step up capacity investment, the gap closes.
FCF margin and cash conversion
The trend is unambiguous: FCF margin has nearly halved — from ~14-16% in FY2016-2018 to under 7% today. Three drivers: (1) pre-Sovos legacy margins were structurally higher; (2) cash interest expense has roughly doubled since FY2017 as debt grew; (3) capex stepped up from ~$300M to $400-500M for Sovos integration and capacity. Cash conversion (FCF/NI) of ~1.17x in FY2024-25 is healthy but somewhat artificial — it's largely D&A-driven, not working-capital tailwind.
Cash flow distortions to watch
| Item | FY2025 ($M) | FY2024 ($M) | What it tells you |
|---|---|---|---|
| Capex | (426) | (517) | Elevated for Sovos integration; ~$400M is a reasonable run-rate |
| D&A | 434 | 411 | Inflated by amortization of Sovos intangibles |
| Stock-based comp | 57 | 99 | Modest (~0.6% of sales) — not a hidden dilution problem |
| Acquisitions, net | 0 | (2,617) | Sovos closed Mar-2024 for ~$2.7B |
| Dividends paid | (459) | (445) | Steady; ~65% of FCF |
| Debt issuance net of repay | (406) | 2,396 | FY2024 funded Sovos with debt; FY2025 net repaying |
| Working capital build | n/a | n/a | Inventory rose from $1.29B (FY2023) to $1.42B (FY2025), a modest drag |
Earnings quality verdict: above-line metrics (operating margin, EPS) have deteriorated more than below-line metrics (operating cash flow). The cash story is supported by amortization of acquired intangibles — real cash, but the spread will narrow if capex stays at $400-500M and D&A normalizes.
Balance Sheet and Financial Resilience
The balance sheet is the single biggest financial risk. CPB has financed two large deals — Snyder's-Lance ($6.1B in FY2018) and Sovos ($2.7B in FY2024) — primarily with debt, and consumer-staples M&A debt is hard to amortize when organic growth is flat.
Debt, cash, and net leverage trend
Read this chart from left to right. Net leverage was around 2.5x before Snyder's-Lance, spiked to 6.7x post-deal, and was painstakingly delevered back to 2.6x by FY2023. The Sovos deal in March 2024 reset leverage to 5.0x, and through FY2025 management has only delevered to 4.3x — the slowest deleveraging cadence of the past decade. Net debt declined just $351M in FY2025 against $459M of dividends and $92M of buybacks: the dividend is consuming most of the deleveraging capacity.
Interest coverage and credit signal
EBIT-to-interest coverage has fallen from 7.0x in FY2023 to 3.3x in FY2025 — a function of (1) higher debt balance, (2) reset of fixed-rate coupons as old paper rolled into a higher rate environment, and (3) lower EBIT. Fitch downgraded the senior unsecured rating from BBB to BBB- in January 2026, citing "sustained high leverage" and a projected ~13% EBITDA decline in FY2026. BBB- is the lowest rung of investment grade — a further cut would push CPB to high-yield, with material consequences for borrowing costs.
What's actually on the balance sheet
Goodwill ($5.0B) plus intangibles ($4.4B) account for 63% of total assets — virtually all of book equity is purchased brand value, not tangible operating assets. Tangible book value per share is deeply negative. This is normal for a packaged-food acquirer, but it raises impairment risk: if Snacks segment performance keeps deteriorating, an intangible-asset writedown could lop several billion off equity overnight (KHC took a similar $13B write-down in FY2025).
Balance-sheet flags: (1) Net Debt/EBITDA 4.3x with a Fitch downgrade to BBB- in Feb-2026; (2) interest coverage 3.3x and falling; (3) ~63% of assets are goodwill + intangibles, exposed to impairment if Snacks underperforms; (4) inventory has risen $130M in two years against falling sales — a working-capital warning sign.
Returns, Reinvestment, and Capital Allocation
A simple test of whether management is creating value: does the business earn an after-tax return on the capital it employs that exceeds its cost of capital? For CPB the answer has shifted from "yes, comfortably" to "barely."
ROIC, ROE, and ROA over time
ROIC of 6.6% is approximately the cost of capital for an investment-grade food name — meaning Campbell's is creating roughly zero economic value at current returns. ROE at 15.6% looks healthier but is flattered by leverage (1.76x debt/equity). ROA at 5.6% confirms the asset-heavy reality of the post-Sovos balance sheet. The FY2017 spike to 16.1% ROIC is the cleanest snapshot of what the legacy business could earn on a tighter capital base — the company has not been able to replicate it through acquisitions.
How management has been allocating capital
The story over eight years: ~$9B has been spent on two acquisitions, ~$3.5B paid in dividends, and only ~$700M used for buybacks. Acquisitions are the dominant lever — and the returns on them have been mediocre. Snyder's-Lance was bought at the peak of snack-category enthusiasm and has been a margin headwind ever since; Sovos was bought at a high multiple (~17x EBITDA) in part because Rao's growth is structurally above category, but it pulled leverage back up to stressed levels.
Share count and per-share value
Share count has been remarkably stable — buybacks are sized only to offset stock-based comp dilution. Management is not actively shrinking the share base, so per-share growth must come from EPS growth, not the float lever. With dividend at $1.56/share and TTM EPS at $1.83, the GAAP payout ratio is 85% — leaving very little room for either reinvestment or balance-sheet repair if earnings dip further. The dividend is well-covered by FCF (~$705M FCF vs. $459M dividend, 64% payout) but will look thinly covered if FY2026 FCF comes in below ~$600M.
Capital allocation verdict: management has chosen acquisition-led growth over per-share compounding, taken on debt twice to fund it, and retained a large dividend through the deleveraging window. The market reads the resulting 7.7% yield as "show me the deleveraging," not "show me the dividend."
Segment and Unit Economics
CPB reports two segments. Their economics are very different and the divergence is widening.
Segment revenue mix and growth
Meals & Beverages grew 15% in FY2025 — almost all from the Sovos acquisition (15-point acquisition contribution). Strip Sovos and the legacy soup/sauce/broth book grew low single digits, helped by foodservice and Canada, partially offset by U.S. retail softness in V8 beverages and condensed soup. Snacks declined 4% in FY2025 with volume/mix down 3 points and net pricing flat — Goldfish, Pepperidge Farm cookies, and Snyder's of Hanover have all lost shelf momentum to private label and to bigger competitors (Mondelez, Frito-Lay).
Segment operating margin
Meals & Beverages margin is ~17.8% — premium-brand economics that anchor the company. Snacks margin is in a 14.8% → 13.3% slide and the trajectory is what's killing the stock: every percentage point of Snacks margin is roughly $40M of segment EBIT, or ~$0.10 of EPS. A 200bps further compression in Snacks margin would, on its own, cut Snacks segment EBIT by ~$80M — not catastrophic, but enough to push leverage back above 4.5x.
Segment operating earnings contribution
Meals & Beverages now contributes 66% of segment operating earnings versus 58% three years ago. The center of gravity is shifting toward soup and sauces — exactly the categories that drove the activist (Third Point, Loeb) overhang in 2018-2019. The Snacks decline matters less to absolute EBIT than the headline implies, but it matters enormously to the multiple because growth investors were paying for Snacks as the higher-growth half of the portfolio.
Valuation and Market Expectations
CPB trades at TTM P/E of ~11x, EV/EBITDA of ~8.7x, P/FCF of ~8.7x, and P/B of ~1.55x at $20.33 (May 13, 2026). All four multiples are at the low end of the company's 10-year range, and all four have compressed materially in the last 12 months as the share price fell from ~$48 to $20.
Valuation history
Three reads from the chart. (1) The P/E spikes in FY2018-FY2019 reflect goodwill impairments cratering EPS — they are not the relevant comparison. (2) The cleanest "normal" range is roughly 15-18x P/E and 11-14x EV/EBITDA in years without acquisition noise. (3) Today's multiples sit ~30-35% below that band. The market is pricing a structural re-rating, not just a cyclical earnings dip.
What the dividend yield tells you
A 7.7% dividend yield on an investment-grade consumer-staples name is extraordinary — General Mills yields 4.5%, Hormel 4.8%, Mondelez 3.6%. The market is implicitly pricing a 30-50% probability of a dividend cut, or at minimum a multi-year freeze. Management has not signaled a cut (the Q2 FY2026 dividend was reaffirmed at $0.39), but the market knows that maintaining the dividend through a deleveraging cycle requires either an EBITDA recovery or an asset divestiture.
Bear / base / bull frame
The math: bear assumes Snacks margin compression continues, EBITDA falls another 5-7% to ~$1.45B, and the multiple stays at trough; base assumes margin stabilization at current level and modest multiple recovery to ~9.5x; bull assumes Snacks volumes inflect by FY2027 and EBITDA recovers to ~$1.7B with a normal-cycle 11x multiple. At $20 the stock is pricing roughly the bear case — which makes the risk/reward asymmetric if you believe Snacks margins stabilize. Sell-side consensus is more constructive: average price target $22-$26 (MarketBeat 22 analysts; Bernstein cut to $21 on Apr 27, 2026, BofA $23, TD Cowen $24, RBC $26).
Peer Financial Comparison
The peer table tells a coherent story:
- Growth: CPB's +6.4% revenue is the highest in the group, but only because Sovos lapped — strip the acquisition and CPB looks more like CAG or KHC (negative).
- Operating margin: CPB at 10.4% sits below GIS (17.0%) and CAG (11.8%), well above HRL (5.9%) and MDLZ (9.2%) — middle of the pack on profitability, not a leader.
- ROIC: CPB at 6.6% is below GIS (9.5%) and CAG (7.4%) — the post-Sovos capital base is dragging returns. Only HRL and MDLZ score lower, and both for similar acquisition-bloat reasons.
- Leverage: CPB at 4.3x is the second-highest in the peer set after KHC. GIS and MDLZ are also stretched, but they earn higher margins to support it.
- Multiple: CPB at 8.7x EV/EBITDA is the cheapest in the comparable group, with KHC's negative numbers excluded. The discount is roughly 2x EV/EBITDA versus GIS — a $3-4/share drag on the equity from leverage and Snacks weakness.
- Dividend yield: CPB's 7.7% is the highest in the set — even ahead of distressed-looking KHC (6.6%) and CAG (6.2%).
Net read: the discount is real and partly deserved — CPB carries higher leverage, lower ROIC, and a Snacks segment that is underperforming Mondelez's better-positioned cookie/cracker book. But the size of the discount (~25% on EV/EBITDA versus GIS) overshoots what the operating gap alone justifies. The gap will close either through CPB's snacks recovery or through GIS losing its premium — most likely the former, which is the asymmetry investors are weighing.
What to Watch in the Financials
| Metric | Why it matters | Latest value | Better | Worse | Where to check |
|---|---|---|---|---|---|
| Snacks segment operating margin | Swing factor for total EBIT and FY2026 EBITDA | 13.3% (FY25) | >14% | <12% | 10-K segment table |
| Net Debt / EBITDA | Drives the BBB- credit rating and deleveraging path | 4.3x (FY25) | <4.0x by Aug-2026 | >4.5x | Balance sheet + EBITDA |
| EBIT / Interest coverage | Investment-grade gating ratio | 3.3x (FY25) | >4.0x | <3.0x | Income statement |
| Free Cash Flow | Funds dividend + deleveraging | $705M (FY25) | >$750M | <$600M | Cash flow statement |
| Dividend coverage (FCF/Div) | Tells you if the dividend is safe | 1.54x (FY25) | >1.5x | <1.3x | FCF / dividends paid |
| Adjusted EPS guidance | Consensus is $2.15-$2.25 (FY26 mgmt) vs. $2.42 prior consensus | $1.83 TTM | >$2.20 | <$2.00 | Quarterly press release |
| Organic sales growth | Tests whether Sovos benefit is masking deeper category decline | -3% organic Q2 FY26 | +1% to +2% | < -2% | Quarterly press release |
| Goodwill / Intangibles writedowns | Risk to book equity | $9.35B (FY25) | No charge | Any impairment | 10-K Note on goodwill |
Closing read
What the financials confirm: Campbell's is still a structurally cash-generative branded packaged-foods business — operating cash flow has been $1.0-1.4B for a decade, FCF stays positive even in poor operating quarters, and the dividend is currently covered by FCF at ~1.5x. The Meals & Beverages segment, especially with Rao's, remains a premium-margin asset that anchors the franchise.
What the financials contradict: the narrative of "defensive consumer staples." With ROIC at the cost of capital, leverage at 4.3x, interest coverage at 3.3x, a Snacks segment in revenue and margin contraction, and a Fitch downgrade to BBB- with a negative trajectory, the credit and equity profile both look much more like a turnaround than a defensive compounder. The 7.7% dividend yield is the market shouting "show me, don't tell me."
The first financial metric to watch is Snacks segment operating margin in the Q3 FY2026 print (early June 2026) — if it stabilizes at ~13% or recovers toward 14%, the EBITDA decline thesis weakens, leverage stops climbing, and a multiple recovery toward 10x EV/EBITDA becomes plausible. If it slips below 12%, the dividend, the credit rating, and the equity multiple all face renewed pressure.