What Happened?
Shares of packaged food company Campbell's (NASDAQ: CPB)
fell 3% in the afternoon session after investors continued to sell off the stock due to a fourth-quarter earnings release that showed a 37% drop in adjusted earnings, missed revenue expectations, and a dividend cut. According to the company's press release, Campbell's reported net sales of $2.14 billion, representing an 8.1% decline year-over-year, which missed Wall Street expectations. Adjusted earnings per share fell to $0.39, meeting consensus analyst estimates but down from $0.62 in the prior-year period.
Adjusted gross margin contracted to 28.6% due to 6% inflation, the company said.
To accelerate its path toward reducing net debt, Campbell’s announced a 36% dividend reset to $0.25 per share quarterly, according to the release. Management also initiated an enterprise-wide cost-reduction program targeting $500 million in savings by fiscal 2030 and guided fiscal 2027 net sales to decline 2% to 4%.
The shares were trading at $21.42, down 3.2% from the previous close.
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What Is The Market Telling Us
Campbell’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock dropped 10.8% on the news that the company reported second-quarter 2026 financial results that met Wall Street expectations, but issued weaker-than-expected full-year 2027 profit guidance and announced a dividend reset. According to a company press release, Campbell's reported second-quarter 2026 net sales of $2.14 billion, representing a 7.9% year-over-year decline, while organic revenue and sales volumes each decreased 1%. Both revenue and adjusted earnings per share of $0.39 met Wall Street's consensus estimates.
However, profitability deteriorated as operating margin contracted to 0.2% from 11.6% in the same quarter last year, and gross margin dropped 3.4 percentage points to 27.3%. The release also said Campbell's projected financial year 2027 adjusted EPS of $1.73 at the midpoint. This forecast fell 9.3% short of analyst estimates. Additionally, the company announced a dividend reset to speed up debt reduction and introduced a new $500 million cost savings initiative targeting 2030.
Campbell's is down 22.7% since the beginning of the year, and at $21.42 per share, it is trading 37.1% below its 52-week high of $34.03 from September 2025. Investors who bought $1,000 worth of Campbell’s shares 5 years ago would now be looking at only $499.42.
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