Campbell's Company (The)

Campbell’s moat derives from a portfolio of entrenched shelf-stable and snack brands, long-standing retailer relationships, and scaled manufacturing and DSD distribution in Snacks.

Intangible assets: Strong brand awareness for Campbell’s soup, Prego, Swanson, V8, Goldfish, Pepperidge Farm cookies, Snyder’s, and now Rao’s; however, trademark impairments (for example Snyder’s) and ongoing promo intensity indicate that brand strength varies by banner.

We score intangible assets at 75/100 given resilience but acknowledge unevenness across the portfolio. Cost advantages: Scale buying, networked plants, and DSD routes provide meaningful cost leverage, partially offset by commodity and packaging volatility and tariffs.

Score 60/100. Efficient scale: Shelf space and DSD route density limit local competition and support retail execution, but do not eliminate national challengers or private label. Score 70/100. Switching costs: Minimal for consumers in center-store categories. Score 30/100. Network effects: Not applicable.

Score 5/100. Weighted together, the moat is solid but not impregnable, and it can erode if promotions accelerate or private label closes quality gaps, particularly against premium Rao’s. Management’s push to focus on 16 leadership brands and raise cost-savings to 375 million dollars by FY28 should modestly reinforce the moat if executed.

Citations: FY25 10-K and Q4 FY25 results, cost-savings target, Sovos close, and balance sheet disclosures.

Pricing power is moderate. Across FY25, net price realization flattened as prior increases rolled off, and volumes were mixed. In Q1 FY26, organic sales declined 1% with modest favorable price realization but weaker volume mix.

Management also disclosed tariff headwinds near 4% of cost of products sold in FY26, which will require mitigation via productivity and selected pricing. Premium Rao’s has brand permission for price, yet consumer discourse shows sensitivity and credible low-priced substitutes, which caps latent pricing upside.

We therefore see mid-cycle pricing power as adequate but not exceptional outside a few flagship SKUs. Citations: Q1 FY26 press release, FY25 Q2 and Q3 press materials, and social sentiment regarding premium sauce trade-downs or dupes.

Demand for soups, sauces, and mainstream snacks is recurring and weather-resilient, underpinning stable cash generation. Reported FY25 net sales grew 6% to 10.3 billion dollars, aided by Sovos and a 53rd week, while organic sales dipped 1%, reflecting category softness in Snacks.

Q1 FY26 results were consistent with guidance, and management reaffirmed FY26 ranges while calling out tariff and investment headwinds. The business is primarily US and Canada, limiting geopolitical risk and currency volatility.

Predictability is better than average for staples, but category mix shift and retailer bargaining power introduce some variability. Citations: FY25 Q4 release, Q1 FY26 release.

Free cash flow remains solid, but leverage is elevated. FY25 cash flow from operations was 1.13 billion dollars with 426 million dollars of capex. Q1 FY26 delivered 224 million dollars CFO and 127 million dollars capex. TTM FCF through Nov 2, 2025 is about 687 million dollars after adjusting for the prior-year quarter.

Balance sheet at FY25 year end showed total debt of approximately 6.86 billion dollars and cash of 132 million dollars, and at Q1 FY26 total debt was 6.97 billion dollars with 168 million dollars of cash. Fitch downgraded the company to BBB- in December 2025 citing leverage sustained above 3.5x and FY26 earnings pressure.

Interest expense was 328 million dollars in FY25, implying moderate interest coverage. Liquidity includes a large revolver and commercial paper capacity. Overall, solvency is fine for a staple, but leverage trims resilience in downturns. Citations: FY25 Q4 release and exhibit, Q1 FY26 release, Fitch downgrade.

Strategically, management acquired Sovos (Rao’s, Michael Angelo’s) for roughly 2.7 billion dollars to lift secular growth and premium mix, then divested non-core Pop Secret and noosa to sharpen focus.

The company raised its multiyear cost-savings target to 375 million dollars by FY28 and continues to invest in network optimization, including facility changes and productivity. Capital returns remain dividend-led with modest, largely anti-dilutive buybacks. The trade-off has been higher leverage and interest cost near term.

We view Sovos as industrially sound, but the price and financing push leverage above our preferred range; the subsequent move to buy 49% of La Regina aligns supply and quality for Rao’s. Execution of savings and debt paydown will determine long-run ROIC accretion.

Citations: Sovos close, Pop Secret sale, noosa sale, cost-savings target, La Regina stake.

Leadership transitioned smoothly in FY25. Mick Beekhuizen, former CFO and Meals & Beverages president, became CEO on February 1, 2025, and Todd Cunfer joined as CFO in October 2025. The board and insider ownership remain significant, with long-standing family influence supporting stability and a multi-decade dividend record.

Strategy centers on 16 leadership brands, productivity, and disciplined portfolio pruning. Risks include near-term earnings guidance credibility under tariff pressure and the need to re-accelerate Snacks. Overall we see competent stewardship with a clear plan and credible cost discipline.

Citations: CEO transition, CFO appointment, insider ownership snapshot.