Campbell’s is currently trading at about 11.5x free cash flow and 11x forward earnings. A lot of debt, but it’s not too bad. Payout ratio is still under 80% despite the 5.8% yield.
Has the MAHA “sell anything processed” gone too far? The whole subsector, Kraft Heinz, Hormel, Conagra, McCormick, have all been hammered. Kraft is trading at 0.7x book. Campbell’s is below its 1995 high and just a touch higher than the bottom in ‘09.
But when I look at their portfolio of brands, it feels pretty good. The soups obviously, but they also have Pepperidge Farm, Cape Cod/Kettle Brand chips, Synder’s and Pretzel Crisps, Goldfish, V8, Prego, Rao’s. I know people are more health conscious than ever, but people are still gonna snack.
Margins have been under pressure, but sales have grown each year since 2021, about 21% cumulatively. Worth a shot or is this category just uninvestable?