Over the past six months, Campbell’s stock price fell to $31.28. Shareholders have lost 11.9% of their capital, which is disappointing considering the S&P 500 has climbed by 13%. This may have investors wondering how to approach the situation.
Is there a buying opportunity in Campbell's, or does it present a risk to your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.
Why Do We Think Campbell's Will Underperform?
Even though the stock has become cheaper, we're swiping left on Campbell's for now. Here are three reasons we avoid CPB and a stock we'd rather own.
1. Demand Slipping as Sales Volumes Decline
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.
Campbell’s average quarterly sales volumes have shrunk by 1% over the last two years. This decrease isn’t ideal because the quantity demanded for consumer staples products is typically stable. 
2. Revenue Projections Show Stormy Skies Ahead
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Campbell’s revenue to drop by 3.1%, a decrease from This projection doesn't excite us and implies its products will see some demand headwinds.
3. EPS Barely Growing
Analyzing the change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.
Campbell’s EPS grew at an unimpressive 1.6% compounded annual growth rate over the last three years, lower than its 6.2% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
Final Judgment
Campbell's falls short of our quality standards. Following the recent decline, the stock trades at 12.7× forward P/E (or $31.28 per share). While this valuation is reasonable, we don’t see a big opportunity at the moment. There are more exciting stocks to buy at the moment. Let us point you toward the Amazon and PayPal of Latin America.
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