By Aaron Back

This is an online version of the Markets A.M. newsletter. I'm Heard on the Street Editor Aaron Back, standing in for Spencer Jakab. Get investing insights in your inbox each weekday by signing up here.

Campbell's has had a rough run lately, including some unfortunate headlines over Thanksgiving. Today the company will update the world on its business with a quarterly report and deserves a fair hearing from investors and the public.

A leaked recording of a mid-level Campbell's executive emerged just prior to the holiday in which he called Indian co-workers "idiots," and said the company makes "highly processed food" for "poor people." As a vice president of information technology, the executive wasn't part of senior leadership and has since been fired. Some of his claims, such as that the company uses "3-D printed" chicken, are false and absurd.

Nonetheless, it was an embarrassing episode during a key sales period. And it caps a difficult year for Campbell's, whose stock has fallen about 28% this year on concerns over a weak consumer and tariffs on things like the steel in its cans.

But investors could be ignoring some more promising trends. For one, Campbell's produces numerous brands, many of which are in fact aimed at well-off consumers. This includes Rao's pasta sauces, which retail for around $8 a jar and receive good reviews from critics. It also includes Pepperidge Farm cookies and a handful of high-end snack brands such as Cape Cod, Kettle and Late July chips.

At the same time, Campbell is home to value-tier offerings like its namesake soups and Prego sauce. There is a case that this portfolio positions Campbell's well for the current environment, dubbed by many a "K-shaped" economy due to the divergence in fortunes between the most fortunate and others.

In its last quarterly report, the company said condensed soups and its broth brands Swanson and Pacific have continued to benefit from cost-conscious consumers cooking at home. Broths saw 7% end-retail-sales growth from a year earlier; condensed soup was flat versus a slight decline in the overall category, according to a company presentation. Meanwhile at the high end, Rao's retail sales growth was 8%, and Milano-brand cookies soared 27% on the introduction of a new white-chocolate line.

Overall the company's guidance remains cautious. Last quarter it forecast for the current fiscal yea that organic sales, which strip out merger-and-acquisition impacts, would be roughly flat while adjusted earnings-per-share would fall 12% to 18%, largely due to the effect of tariffs.

But these negatives now look to be priced into the stock, which means any positive surprises could prove powerful. Campbell's now trades at just 11.9 times forward earnings, according to FactSet, compared with a 10-year average of 15.9 times. Shareholders can also collect a 5.2% dividend yield while they wait for positive catalysts.

When it comes to investing, everything has a price.

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December 09, 2025 06:57 ET (11:57 GMT)

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