The Campbell's Company (CPB Quick QuoteCPB - Free Report) reported third-quarter fiscal 2026 results, wherein the bottom line beat the Zacks Consensus Estimate, while sales missed expectations. Both earnings and revenues declined year over year, reflecting continued top-line softness, inflationary pressures and tariff-related costs. 

However, the company reaffirmed its fiscal 2026 guidance and highlighted progress in its cost-savings initiatives, Meals & Beverages portfolio and key Snacks priorities.

CPB’s Quarterly Performance: Key Metrics and Insights

Adjusted earnings per share (EPS) were 50 cents, down 32% year over year due to lower adjusted earnings before interest and taxes (EBIT). However, the bottom line surpassed the Zacks Consensus Estimate of 48 cents.

Net sales of $2,366 million decreased 4% year over year and missed the Zacks Consensus Estimate of $2,387 million. Organic net sales also declined 4%, primarily due to lower volume and unfavorable product mix, partially offset by positive net price realization. The quarter included a modest headwind from the noosa divestiture.

Adjusted gross profit declined 12% to $656 million. Adjusted gross margin contracted 240 basis points (bps) to 27.7%, mainly due to cost inflation, tariffs and other supply-chain costs. These pressures were partly offset by supply-chain productivity improvements, cost-savings initiatives and favorable pricing. Tariffs alone represented a gross margin headwind of about 310 bps during the quarter.

Adjusted marketing and selling expenses increased 2% to $211 million, reflecting higher brand-building investments and marketing spending.

Adjusted administrative expenses decreased 1% to $149 million due to savings initiatives and lower incentive compensation, partly offset by higher general administrative costs.

Adjusted EBIT declined 24% to $274 million, primarily due to lower adjusted gross profit and higher marketing investments. Adjusted EBIT margin contracted 300 bps to 11.6%.

Decoding CPB’s Segmental Performance

Meals & Beverages: Net sales decreased 4% to $1,426 million. Organic net sales also declined 4% due to an unfavorable volume/mix of 5%, partly offset by 1% favorable net price realization. The segment faced a difficult comparison against strong soup demand in the prior year and a roughly 1% headwind related to shipment timing associated with the Sovos Brands ERP implementation and prior winter-storm delays.

U.S. soup sales plunged 8%, though the company continued to benefit from resilient at-home cooking trends and strong performances from Rao’s, Swanson and Pacific Foods. Segment operating earnings fell 16% to $213 million due to inflation, tariffs and lower volume.

Snacks: Net sales declined 4% to $940 million, with organic net sales also down 4%. Volume/mix reduced sales by 6%, partially offset by 2% favorable price realization. Weakness stemmed primarily from salty snacks, crackers, fresh bakery products, third-party partner brands and contract manufacturing sales.

Segment operating earnings decreased 32% to $95 million due to elevated inflation, tariffs, supply-chain costs and lower volumes, partly offset by productivity gains, pricing actions and cost savings.

Management noted encouraging signs in Snacks, particularly in Goldfish, where core products remained stable for a second consecutive quarter, and in Pepperidge Farm fresh bakery, where service levels and in-stock performance improved. The company has also begun implementing a simplification strategy across its salty snacks portfolio to strengthen performance and profitability.

CPB: Strategic Highlights and Brand Performance

Campbell’s continued to benefit from durable at-home cooking trends, which supported growth in key cooking-oriented brands. Rao’s remained a standout performer, delivering 15% consumption growth during the quarter, with pasta sauce consumption increasing 13%. Rao’s generated approximately 75% of the total Italian sauce category growth and maintained its leadership position in dollar share across all regions.

Subsequent to the end of the quarter, Campbell’s completed its acquisition of a 49% stake in La Regina on May 4, 2026, strengthening its commitment to the Rao’s platform and long-term growth strategy. 

The company also announced that all leadership brands have successfully transitioned to natural colors ahead of schedule, with the remaining regional Snacks brands expected to complete the transition by July 2026.

CPB’s Other Financial Metrics

At the end of the third quarter, Campbell’s had cash and cash equivalents of $402 million and total debt of $7,010 million.

Cash flow from operations for the first nine months of fiscal 2026 totaled $839 million compared with $872 million in the prior-year period. Capital expenditures were $297 million during the period. The company returned $380 million to shareholders year to date, primarily through dividends, while share repurchases totaled $26 million.

Campbell’s delivered approximately $20 million in savings during the quarter, bringing cumulative savings to $200 million toward its fiscal 2028 target of $375 million. Management expects these savings to help offset tariff and inflationary pressures while funding investments in growth initiatives.

CPB Reaffirms Fiscal 2026 Guidance

Campbell’s reaffirmed its previously issued fiscal 2026 outlook. The company continues to expect organic net sales to decline 1-2% year over year. Adjusted EBIT is projected to decrease 17-20%, while adjusted EPS is expected in the range of $2.15-$2.25, representing a decline of 23-26% from the adjusted fiscal 2025 base.

Management expects low-single-digit core inflation excluding tariffs, productivity benefits equivalent to roughly 5% of cost of products sold, and approximately $70 million in enterprise cost savings for fiscal 2026. The company also anticipates adjusted net interest expense of $320-$325 million and capital expenditures of roughly $370 million.

While management acknowledged ongoing consumer and cost pressures, it expressed confidence in the long-term strength of Campbell’s portfolio, the resilience of at-home cooking trends and the progress being made to improve execution and profitability across the Snacks business.

Shares of this Zacks Rank #5 (Strong Sell) company have lost 14.3% over the past three months compared with the industry's decline of 9.7%.

Better-Ranked Stocks to Consider

The Chef's Warehouse, Inc. (CHEF Quick QuoteCHEF - Free Report) , a specialty food distributor serving restaurants, hotels and hospitality customers, carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for The Chef's Warehouse’s current financial-year sales and earnings indicates growth of 8.3% and 24.7%, respectively, from the prior-year reported levels. CHEF delivered a trailing four-quarter earnings surprise of 28.9%, on average.

B&G Foods (BGS Quick QuoteBGS - Free Report) is a branded packaged-food company that manufactures, markets, and distributes a portfolio of shelf-stable and frozen food products. BGS carries a Zacks Rank #2.

The Zacks Consensus Estimate for B&G Foods’ current and next financial-year earnings indicates year-over-year growth of 11.8% and 15.8%, respectively. 

Nomad Foods (NOMD Quick QuoteNOMD - Free Report) , a leading frozen-food company that owns brands such as Birds Eye, iglo, and Findus, and sells frozen fish, vegetables, ready meals and other frozen foods across Europe, currently carries a Zacks Rank #2. NOMD delivered a trailing four-quarter earnings surprise of 8.6%, on average.

The Zacks Consensus Estimate for Nomad Foods’ current fiscal-year sales and earnings suggests a year-over-year decline of almost 1% and 8%, respectively, though the consensus mark for the next fiscal-year sales and EPS indicates respective growth of 1.6% and 6.9%.