Does the Recent Slide in Campbell's Share Price Signal an Opportunity for Investors?

• Curious if Campbell's is actually a bargain right now? You're not alone, as investors everywhere are asking if the fundamentals still justify its current share price.
• After a stretch of volatility, Campbell's stock is down 1.8% over the past week and has slid 3.7% in the last month, reflecting continued caution in the market.
• News around the food industry has centered on shifting consumer habits and the impact of changing supply chain costs. Recent headlines about rising ingredient prices and evolving shopping patterns have put traditional brands like Campbell's under a brighter spotlight.
• Right now, Campbell's has a valuation score of 4 out of 6 based on our rigorous checks, meaning it looks undervalued in several key areas. With that in mind, let's break down how we arrive at this valuation. Stay tuned for a smarter approach that could give you an even clearer perspective by the end of this article.

Find out why Campbell's's -31.4% return over the last year is lagging behind its peers.

Approach 1: Campbell's Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's value. This approach helps investors gauge whether a stock's current price fairly reflects its long-term earning power.

For Campbell's, the most recently reported Free Cash Flow (FCF) stands at $670.7 million. According to analyst estimates and further projections, Campbell's annual Free Cash Flow is expected to steadily rise, reaching $921.8 million by 2035. Analysts forecast FCF through 2028, after which projections are extrapolated based on recent trends. These growing cash flows are all presented in US dollars.

Applying the 2 Stage Free Cash Flow to Equity method, the DCF analysis calculates Campbell's intrinsic value at $63.56 per share. With the stock currently trading at a 52.4% discount to this estimated fair value, Campbell's appears significantly undervalued by the market based on its future cash-generating potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Campbell's is undervalued by 52.4%. Track this in your watchlist or portfolio, or discover 928 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Campbell's.

Approach 2: Campbell's Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is often the preferred metric for valuing established and profitable companies like Campbell's. This ratio allows investors to quickly compare how much they are paying for each dollar of earnings. Because it focuses on actual reported profits, the PE ratio offers insight into whether a stock is priced fairly, particularly for firms with stable and consistent earnings.

What makes a "normal" or "fair" PE ratio varies depending on expected earnings growth and perceived risk. Companies with faster earnings growth or lower risk typically command higher PE multiples, while slower-growing or higher-risk firms usually trade at lower ones.

Campbell's currently trades on a PE of 15.0x. This is somewhat higher than its peer group average of 13.8x, but lower than the broader food industry average of 20.9x. To go beyond these general benchmarks, Simply Wall St provides a proprietary "Fair Ratio" in this case, 17.9x that factors in Campbell's specific growth prospects, risk levels, profit margins, scale, and its industry context. Unlike a simple comparison to peers or sector averages, this Fair Ratio adapts to the company's unique business profile and delivers a more tailored assessment of valuation.

With Campbell's actual PE of 15.0x sitting comfortably below the Fair Ratio of 17.9x, the stock appears undervalued based on this approach.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1440 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Campbell's Narrative

Earlier we mentioned that there's an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a dynamic story that you build around a company's future, connecting your assumptions about its revenue, earnings growth, and profit margins to a calculated fair value.

Instead of just relying on static numbers or analyst targets, Narratives let you share the perspective behind your forecast. By combining the company’s story, the numbers that matter, and your expectations, you can view everything in a single, transparent format. Narratives on Simply Wall St's Community page empower millions of investors to craft forecasts, see other users’ stories, and instantly visualize how changes in the business, markets, or news could shift a stock’s fair value.

With Narratives, deciding when to buy or sell becomes clearer. You can compare your Fair Value with the current Price and see how your viewpoint stacks up against the crowd. Narratives update automatically with the latest news and earnings, so your outlook always reflects what’s happening in real time.

For Campbell's, one Narrative sees upside to $62 if margin improvements and premium innovation accelerate, while another assigns just $29 if persistent volume declines and cost headwinds dominate. This shows how your story and expectations can directly shape your investing decisions.

Do you think there's more to the story for Campbell's? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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