Higher Inflation And Limited Pricing Power Suggest More Margin Compression

Research evidence excerpt

Higher Inflation And Limited Pricing Power Suggest More Margin Compression

Food: Food Producers

Campbell's Co

TD SECURITIES (USA) LLC EARNINGS UPDATE

June 9, 2026

Price: $21.49 (06/8/2026) Higher Inflation And Limited Pricing Power

Price Target: $20.00 Suggest More Margin Compression

HOLD (2)

ESG SCORE: 50/100

Robert Moskow THE TD COWEN INSIGHT

646 562 1474

Campbell’s 3Q results met internal expectations, but quality was low. Org sales -4% missed

robert.moskow@tdsecurities.com

consensus of -3.5% and EPS of $0.50 beat by $0.02 in part due to a shift in marketing 4Q. For

Jacob Henry, CFA FY27, management warned of higher inflation, a $40M reset in incentive comp, and limited

646 562 1380 pricing power. We lower FY27 EPS to $1.97 and raise FY26 to $2.18.

jacob.henry@tdsecurities.com

Sergio Matsumoto Muted Pricing Power And Rising Costs

646 562 1339

The inflation outlook has changed significantly since CPB's last earnings call, now headingsergio.matsumoto@tdsecurities.com

toward 5-6% for FY27 if oil stays at $100/barrel. This means the company will need to pivot

Victor Ma toward higher price realization to offset their costs, while also ensuring the affordability

646 562 1306

of its struggling mainstream brands. Perhaps in acknowledgment of the difficult pricing

victor.ma2@tdsecurities.com

environment, management described RGM and trade promotion optimization as their

Seamus Cassidy preference and list price increases as their "last resort." When we asked whether grocer

646 562 1319 customers will open the door for higher pricing, management said it is too soon to tell.

seamus.cassidy@tdsecurities.com

Some "Tough Decisions" Ahead To Adjust To Lower Snacks Volume

Key Data

Symbol NYSE: CPB Snacks sales declined 4% (vol/mix -6%), profit fell 32%, and operating margin declined