Campbell's (CPB) Could Be 3% Undervalued On Its Credit Facility Extension

Moody's downgraded Campbell Soup's (CPB) rating to Baa3 from Baa2, citing weak earnings, high leverage, and expectations of further declines in revenue and operating profit. The company's leverage increased to 4.9x and is expected to remain elevated. Moody's also noted Campbell's acquisition of a stake in La Regina and elevated cost inflation as challenges. The negative outlook reflects risks to an earnings turnaround and weak credit metrics.

Consumers Energy's J.H. Campbell coal plant, set to close in 2025, was kept running by federal orders citing grid reliability, costing $1M/day. Michigan officials and groups challenged the DOE's actions, with the court ultimately allowing the plant's closure. The plant's operation has been a point of contention between local, state, and federal authorities.

Campbell Soup (CPB) shares have fallen 46% over five years, contrasting with the Nasdaq's 79% gain. The company's P/E ratio is 9.65, 51.9% below its 10-year average. FY2025 net sales were $10.3 billion, with earnings of $2.01 per share. However, the dividend payout ratio is 119%, and earnings are declining. The company is resetting its dividend to strengthen its balance sheet, which may impact the 6.8% yield.

Campbell Soup Company (CPB) cut its dividend by over a third during its Q4 2026 earnings call, citing falling sales and profits. The company plans a multiyear rebuild, focusing on its soup business and cost savings. Net sales fell 8% to $2.137 billion, and adjusted EPS dropped to $0.39. Snacks segment saw a 6% decline in organic sales. Management expects challenges in Q1 2027.

A US District Court ruled that the Trump administration's emergency order to keep the J.H. Campbell coal plant operating was unlawful. The court sided with Michigan and other states, finding the federal government overstepped its authority. Consumers Energy, the plant's owner, plans to replace it with methane, solar, and battery storage. Ratepayers in the MISO area have spent over $248 million to keep the plant running, with no immediate need for its electricity. Earthjustice and other climate o

Campbell Soup (CPB) shares fell 6.9% after reporting a revenue decline of 8% and cutting its dividend by 36%. Management cited weak sales and inflation challenges, with snack and soup businesses underperforming. The company plans a $500M cost-saving program by 2030 and expects margin reductions. Hedge fund interest increased in Q2, with a forward P/E of 12.89.