$11.66
$42.03
bear $11.66
base $29.12
bull $42.03
margin of safety $16.00
market price* $19.87
Campbell's makes branded packaged foods in two segments. Meals & Beverages covers Campbell's soups, Prego and Pace sauces, Swanson broth, V8 and, since March 2024, Rao's sauces and frozen entrees. Snacks covers Goldfish, Pepperidge Farm, Snyder's of Hanover, Lance, Cape Cod, Kettle and Late July. Sales were $10,253M in fiscal 2025 (the 53 weeks ended August 3, 2025), up 6% because of the Sovos Brands purchase. Excluding Sovos, the extra week and divested brands, Meals & Beverages sales were roughly flat, while Snacks sales fell 4%. In the first nine months of fiscal 2026 (through May 3, 2026) sales were $7,607M against $7,932M a year earlier (down about 4%), cash from operations was $839M against $872M, and net earnings were $463M against $457M. The fiscal 2026 annual report was not yet available, so this analysis rests on the fiscal 2025 annual report and the third-quarter update. We could not split the nine-month sales decline between divested brands (Pop Secret and noosa) and underlying weakness. How we measure earning power. We start with cash from operations, remove the swings in working capital, subtract stock compensation as a real cost, and deduct only the part of capital spending needed to keep the plants running (spending tied to sales growth is treated as optional). One recurring operating cash outflow reported as 'other' ($41M to $77M a year) is left in as a genuine cost. Impairment charges ($129M in fiscal 2024, $176M in fiscal 2025) and intangible amortization ($68M in fiscal 2025) are non-cash and are added back, so we carry the risk of wasting brand value in the declining growth paths below rather than in the starting level. On that basis owner earnings per share were $2.87 (2019), $3.18, $3.23, $3.06, $3.18, $2.36 (2024) and $3.02 (2025). Because Campbell's borrowed heavily for Snyder's-Lance (2018) and Sovos (2024), we value the whole business before interest and then subtract the debt. Adding back the interest paid gives business cash flow per share of $3.68 (2022), $3.82, $3.01 and $4.12 (2025). We use the median of those four years, $3.75 per share (about $1.12B), as the starting level. Earlier years were left out because they include the Snyder's-Lance integration and the pandemic soup surge, conditions that have since faded. Fiscal 2024 stays in even though it is low (Sovos deal costs, $517M of capital spending, $99M of stock compensation) because Sovos is now part of the business. Growth check. Owner earnings per share rose 28% in fiscal 2025 ($2.36 to $3.02), but from a depressed year. The base case assumes 0% growth in year one from the $3.75 starting level, which sits 9% below fiscal 2025's $4.12. The reason is dated and in the filings: by our estimate nine-month fiscal 2026 owner earnings were about $623M against $699M a year earlier (roughly 11% lower), sales are down, and the annual report says tariffs will bring 'more significant' cost pressure in 2026. Growth that we did not credit in any case: Rao's gains, foodservice and Canada growth, Sovos synergies and cost-savings targets. These are new products, share gains or management targets, not secured or repeated at a steady small pace; Campbell's has grown through two large acquisitions, not small repeatable steps. Debt. At May 3, 2026 total borrowings were $7,010M ($864M due within a year, $6,146M longer term, including finance leases) against $402M of cash. Keeping about $130M for operations (year-end cash was $132M in fiscal 2025), net debt is $6,738M. About $5.8B of the notes listed in the annual report carry coupons averaging roughly 4.5%, below our 6% yardstick (for example 2.375% notes due 2030 and 3.125% notes due 2050), and the present value of that saving, about $510M, reduces what shareholders effectively owe to about $6,228M ($20.83 per share on 299M diluted shares). Nearest maturities as of the annual report are $500M of 5.20% notes due March 2027, $1.0B of 4.15% notes due March 2028 and $600M of 5.20% notes due March 2029. A $1.85B revolving credit line, undrawn at year-end, requires EBITDA of at least 3.25 times interest. Base case, $29.12 per share. Business cash flow starts at $3.75 and slips 1% a year for ten years, then 2% a year afterwards. The evidence for a slow decline is Snacks sales down 4%, U.S. soup declines and unfavorable pricing in fiscal 2025; the evidence for stability is that per-share business cash flow has stayed between $3.0 and $4.1 in the six years since the Snyder's-Lance deal. The business is worth about $14.9B ($49.95 per share); it owes about $6.2B; the difference is about $8.7B, or $29.12 per share. Bear case, $11.66 per share. Business cash flow falls 10% in year one (the nine-month trend continues and tariff costs are not passed on), declines 4% a year for nine more years (matching Snacks' fiscal 2025 sales decline), then 5% a year. Campbell's also has a record of overpaying: $2.587B of trademarks (Rao's, Snyder's of Hanover, Pace, Pacific Foods, Late July, Allied) had 10% or less cushion in the latest impairment test, and further write-downs would confirm that. The business is worth about $9.7B ($32.49 per share); it owes about $6.2B; the difference is about $3.5B, or $11.66 per share. Even here business cash flow of roughly $1.0B is about three times the roughly $330M of annual interest, so we assume the 2027 to 2029 maturities can be refinanced; if lenders would not roll them, shareholders would face dilution or forced asset sales and the equity would be worth much less. Bull case, $42.03 per share. Business cash flow stays at fiscal 2025's $4.12 for ten years (a level reached in the latest full year, which requires tariff and input-cost pressure to be offset), then declines 1% a year. The business is worth about $18.8B ($62.86 per share); it owes about $6.2B; the difference is about $12.6B, or $42.03 per share. What changed since our August 2026 analysis (bear $2.00, base $11.86, bull $29.13). The earlier work discounted earnings that were already after interest at 8% to 9.5% and then also subtracted debt, which counted the borrowing cost twice, and it used a debt figure of $6.4B when the balance sheet showed $6.9B at the end of fiscal 2025. We now value the business before interest at a uniform 6% and subtract debt once, which raises every case. Operationally the news is mixed to weaker: nine-month sales are down about 4% and owner earnings are about 11% lower, so we start below fiscal 2025's level, while earnings per share held up and no impairment was recorded in the first nine months. What would make this wrong. A steeper fall in soup and snacks volumes than the 4% we model, tariffs on tinplate steel and ingredients that cannot be priced through, further brand write-downs, or trouble refinancing about $2.1B of notes due 2027 to 2029 would push results toward the bear case. Net debt of roughly 3.8 times EBITDA leaves little room for error. Margin-of-safety price $16.00. About 45% below the base case: a mature, slowly eroding category portfolio with heavy leverage calls for a wide margin of safety, and the price sits between the bear and base cases, closer to the downside.