Campbell Soup (CPB:NYS) Fundamental Valuation Report

Fundamental Valuation Report

Campbell Soup(CPB:NYS)

Consumer Defensive:Packaged Foods

This Report was generated using the valuation tools available on StockCalc.com. For a free 30 day trial click here.

Close Price/Date
$47.56 (USD) 09/25/2020

Weighted Valuation
$49.50 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 4.1%

Valuation Models Comparables: $57.92 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation
According to Analyst consensus at $49.50 this stock is Fairly valued

Company Overview (CPB:NYS USD)

Price 47.56
Range 46.53 – 47.96
52 week 41.41 – 53.84
Open 46.73
Vol / Avg. 2.41M/3.44M
Mkt cap 14.38B
P/E 24.39
Div/yield 1.40/0.03
EPS 5.36
Shares 302.27M
Beta 0.43

Company Description

With a history that dates back around 150 years, Campbell Soup is now a leading global manufacturer and marketer of branded convenience food products, most notably soup. The firm’s product assortment includes well-known brands like Campbell’s, Pace, Prego, Swanson, V8, and Pepperidge Farm. Following the sale of its international snacking operations, the firm is poised to derive nearly all of its sales from its home turf. Campbell has made a handful of acquisitions to reshape its product mix the past few years, including the tie-up with Snyder’s-Lance (completed in March 2018), which stands to enhance its exposure to the faster-growing on-trend snack food aisle, complementing its Pepperidge Farm lineup.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for CPB:NYS

Using a discounted cash flow model we generated an intrinsic value of $67.67 (USD) for CPB:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

CPB:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $67.67 1% 5% 1% 5%
WACC (or Ke) 3.99 $94.13 $51.83
Terminal Growth Rate 0.00 $53.08 $92.03
Tax Rate 0.23 $72.70 $62.65
Cash Flow 1,487,257,801 $62.85 $72.50
Capital Expenditures -352,600,000 $66.62 $68.73
Long Term Debt 3,533,000,000 $68.26 $67.09

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $89.84 (USD) for CPB:NYS. We also generated a valuation of $57.92 (USD) using other metrics and comparables.
The comparable companies were Flowers Foods (FLO:NYS), Lancaster Colony (LANC:NAS), McCormick & Co (MKC:NYS), Sanderson Farms (SAFM:NAS) and Conagra Brands (CAG:NYS).

Company CPB:NYS End Date Value
Earnings/Share $5.36 (USD)
Book Value/Share $8.48 (USD)
Sales/Share $28.59 (USD)
Cash Flow/Share $4.59 (USD)
EBITDA/Share $4.73 (USD)
Price Based on Comps Adjustment Factor (%)
$189.71 (USD) -19.3
$35.83 (USD) 0.0
$68.13 (USD) 44.5
$62.44 (USD) -39.1
$120.51 (USD) 11.8
CPB:NYS Ratios Used Average Values FLO:NYS LANC:NAS MKC:NYS SAFM:NAS CAG:NYS
24.39 PE Ratio 35.39 50.49 36.21 34.46 0.00 20.42
5.61 PB Ratio 4.23 3.76 6.32 6.99 1.88 2.18
1.66 PS Ratio 2.38 1.18 3.71 4.74 0.73 1.55
10.36 PCF Ratio 18.22 11.58 28.98 26.04 15.17 9.31
13.87 EV to EBITDA 25.46 20.88 26.85 25.01 40.19 14.36

Multiples

Using a multiples approach we generated a valuation of  $84.61 (USD) for CPB:NYS

Company CPB:NYS End Date Value
Earnings/Share $5.36 (USD)
Book Value/Share $8.48 (USD)
Sales/Share $28.59 (USD)
Cash Flow/Share $4.59 (USD)
EBITDA/Share $4.73 (USD)
Price Based on Comps Adjustment Factor
$154.11 (USD) 0
$86.07 (USD) 0
$53.13 (USD) 0
$52.46 (USD) 0
$77.28 (USD) 0
Ratios Ratio Average
PE Ratio 28.75
PB Ratio 10.15
PS Ratio 1.86
PCF Ratio 11.42
EV to EBITDA 16.33

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  CPB:NYS for the last 10 years was  9.77

We ran the Adjusted Book Value for  CPB:NYS and generated a book value of  $8.49 (USD)
By multiplying these we get an adjusted valuation of  $82.88 (USD)

Analyst Data

In the Stockcalc database there are 4 analysts that provide a valuation for CPB:NYS. The 4 analysts have a concensus valuation for CPB:NYS for 2021 of $49.50 (USD).

CPB:NYS Campbell Soup

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
1 3 2 2.6667 Hold 2020-9-24

Current Price: 47.56 USD

Analyst Consensus
USD Millions 2021 2022
Mean EPS 2.90 2.85
# EPS Analysts 5 4
Mean Revenue 8,353.40 8,373.80
# Revenue Analysts 3 2
Mean Target Price 49.50
Mean Cash Flow 4.10 4.04
Mean EBITDA 1,746.70 1,734.10
Mean Net Income 887.90 890.00
Mean Debt Outstanding 4,972.40 4,510.00
Mean Tax Rate
Mean Growth Rate 8.42
Mean Capital Expenditure 380.00 371.10

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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