The news proved a bit mixed for Campbell Soup (CPB) today, as word emerged that the recent pullbacks in consumer spending have been good for the company. With more people cooking at home than ever before, they are turning to Campbell Soup products in growing numbers. However, the news is not all good, especially considering Campbell Soup snack products. These two forces slammed together to produce a net hit to Campbell, and shareholders sent the stock down fractionally in Monday afternoon’s trading.
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Basically, noted Campbell CEO Mick Beekhuizen, consumers are cooking at home more. A lot more. In fact, they have not been cooking at home this much since “early 2020,” he noted, and pretty much all of us over the age of, oh, 10 or so remember what was happening in early 2020. That is sending consumption rising for every income bracket involved in both the meals and beverages category.
Of course, this has a lot of people wondering what the overall impact will be. Right now, it is good news for Campbell, as a lot more people eat its various products. But the potential fallout of such a move could be rough for consumer spending habits, and potentially bring about a full-on recession. Even if the move is just connected to the price of food—which has been high for the last couple of years now—it could still have knock-on effects that spread throughout the wider economy.
But Snacks Took a Hit
Despite the fact that people are eating at home more, that does not seem to extend to snacks, reports noted. Campbell’s snack business was in open decline, and that too is raising some interesting—and frightening—questions about consumer health.
On the one hand, this could be a sign of consumer belt-tightening in the financial sense. People are spending less on snacks and focusing on the basics. However, with the rise of weight-loss drugs out there, we have heard before about snack foods taking a hit. This could be ongoing support of that narrative as well. A more likely implication is a combination of factors; some of the losses in Campbell’s snack operations are a matter of healthy eating, while others are more connected to perceptions of an unhealthy economy.
Is Campbell Soup a Good Stock to Buy?
Turning to Wall Street, analysts have a Hold consensus rating on CPB stock based on two Buys, 11 Holds and four Sells assigned in the past three months, as indicated by the graphic below. After a 23.02% loss in its share price over the past year, the average CPB price target of $38.88 per share implies 14.25% upside potential.
