Americans eat more than 10 billion bowls of soup every year. And for roughly 149 years, one organization has sat atop the throne as most the popular soup brand in the U.S. and around the world: The Campbell Soup Company.
The U.S. Food and Drug Administration (FDA) regulates approximately $417 billion worth of domestic food products and $49 billion worth of imported foods. Though Campbell’s headquarters is in New Jersey, the organization sells canned soup and related food products in 120 countries across the world. Additionally, the company divides itself into three divisions: Simple Meals, consisting largely of soups; Baked Snacks, including Pepperidge Farm products; and the Health Beverage division, which includes V8 juices.
Though Campbell Soup Company has been extremely successful since the 1860s, there are some pricing concerns as of late, prompting investors and customers to be wary of the successful organization.
According to Stock News Journal, Campbell’s stock is currently trading at $37.46, equipped with a market capitalization of $10.98 billion. Although earning projections remain positive, year-to-date shares dropped 22.14%. Some Consumer Goods analysts are now advising investors to avoid Campbell’s stock.
The Motley Fool reports that Campbell’s shares have recently hit a five-year low. Perhaps one of the main reasons the company’s future is seemingly up in the air can be attributed to longtime Campbell CEO Denise Morrison’s recent announcement that she will be leaving the organization after seven years.
“This is a bad, bad report,” said analyst Ron Gross. “Denise Morrison did not have a successful seven years at this company, and this quarter kind of puts an exclamation point on it. Organic sales were basically flat on weak performance of soup — which, I’m no analyst, but if you’re a soup company, you should probably have some stronger sales of soup.”
Other players are attempting to take advantage of Campbell’s uncertainties, but popular consumer goods organizations like Kellogg’s are also struggling, nearing 52-week lows and very low dividend yields and valuations.
According to Barron’s, Campbell Soup Company faces two major problems that could continue to negatively impact their success within the competitive market. First, the fact that the majority of consumers across the country and the globe are showing signs of preferring fresh foods compared to canned alternatives. Secondly, major organizations like Walmart, Amazing, CVS Health, and Dollar General are attempting to take shares from conventional grocery stores. This grocery battle has already resulted in Walmart cutting both soup promotions and Campbell’s sales.
As of 2017, it looked as though the company was in good standing and primed for a successful future. Campbell acquired Pacific Foods of Oregon for $700 million as well as agreeing to purchasing snack company Snyder’s-Lance for an additional $4.87 billion, the largest deal in the history of the company. However, in January of 2018, their only factory in Canada was forced to close, followed by Morrison’s resignation, and all these other negative aspects.
Campbell Soup is still projected to increase its revenue by a fraction of a percentage point through July, while increasing its overall earnings per share by 2%, but there are some real concerns facing the organization for both the immediate and distant future.