Campbell's (NASDAQ:CPB) Q1 Sales Beat Estimates

Packaged food company Campbell's (NASDAQ:CPB) announced better-than-expected revenue in Q1 CY2025, with sales up 4.5% year on year to $2.48 billion. Its non-GAAP profit of $0.73 per share was 11.4% above analysts’ consensus estimates.

Is now the time to buy Campbell's? Find out by accessing our full research report, it’s free.

Company Overview

With its iconic canned soup as its cornerstone product, Campbell's (NASDAQ:CPB) is a packaged food company with an illustrious portfolio of brands.

Sales Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

With $10.23 billion in revenue over the past 12 months, Campbell's is one of the larger consumer staples companies and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because there are only so many big store chains to sell into, making it harder to find incremental growth. For Campbell's to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.

As you can see below, Campbell’s sales grew at a mediocre 6.6% compounded annual growth rate over the last three years as consumers bought less of its products. We’ll explore what this means in the "Volume Growth" section.

This quarter, Campbell's reported modest year-on-year revenue growth of 4.5% but beat Wall Street’s estimates by 2.1%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last three years. This projection is underwhelming and implies its products will face some demand challenges.

Unless you’ve been living under a rock, it should be obvious by now that generative AI is going to have a huge impact on how large corporations do business. While Nvidia and AMD are trading close to all-time highs, we prefer a lesser-known (but still profitable) stock benefiting from the rise of AI. Click here to access our free report one of our favorites growth stories.

Volume Growth

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

To analyze whether Campbell's generated its growth (or lack thereof) from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.

Over the last two years, Campbell’s average quarterly sales volumes have shrunk by 1.1%. This isn’t ideal for a consumer staples company, where demand is typically stable. Luckily, Campbell's was able to offset fewer customers purchasing its products by charging higher prices, enabling it to maintain its organic sales. We hope the company can grow its volumes soon, however, as consistent price increases (on top of inflation) aren’t sustainable over the long term unless the business is really really special.

In Campbell’s Q1 2025, sales volumes jumped 2% year on year. This result was a well-appreciated turnaround from its historical levels, showing the company is heading in the right direction.

Key Takeaways from Campbell’s Q1 Results

We enjoyed seeing Campbell's beat analysts’ organic revenue expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. On the other hand, its gross margin fell short of Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock traded up 1.7% to $34.63 immediately following the results.

Is Campbell's an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.