# Campbell Soup Company (CPB) — Financial Analysis

**Exchange:** NYSE  
**Coverage as of:** 2026-Q2  
**Updated:** 2026-05-28  
**Tier:** Free primer (step 2 of 19)  
**Sibling pages:** /stocks/CPB/thesis · /stocks/CPB/memo

## Financial Snapshot

---
ticker: CPB
source: coverage-next-full
step: 04
coverage_date: 2026-05-28
---

### CPB — Step 04: Financial Quality & Adversarial Sweep

#### Key Findings

CPB's financial quality is **mediocre but not impaired**. The gap between GAAP EPS ($2.01 FY25) and adjusted EPS ($2.97 FY25) is wide — $0.96/share of add-backs, of which the largest items are non-cash impairment ($0.44), cost-savings/optimization opex ($0.32), and divestiture charges ($0.11) [S1]. These are accounting-noisy but mostly legitimate (PPA-driven non-cash + integration costs that will eventually anniversary). Cash flow quality is acceptable: OCF $1.13B converts to FCF $705M (5% of revenue), with $145M of PEAK savings already in the run-rate [S1][S2]. The **adversarial sweep** finds no smoking-gun short report, no SEC investigation, and no major accounting restatement — but does surface (1) PFAS litigation overhang in soup/broth cans, (2) labeling lawsuits (typical CPG nuisance), (3) historical FY24 cybersecurity incident referenced in non-GAAP reconciliation [S1], and (4) the question of whether Sovos/Rao's goodwill ($1.1B+ allocated) is at risk of impairment if premium frozen growth disappoints.

#### Implications for Thesis and Valuation

- **Use adjusted EPS for valuation lens** but recognize $0.20–$0.30 of adjustments will be recurring through FY27 (integration + PEAK opex)
- **Watch goodwill ($4.99B) + other intangibles ($4.34B) = $9.3B** — 61% of total assets. Even a 10% Sovos goodwill impairment would be a $300M+ non-cash hit
- **No quality red flags requiring investigation discount** — straightforward CPG accounting
- **FCF coverage of dividend tight (1.5x)** — financial flexibility limited

#### Objective

Score financial-statement quality, reconcile GAAP-to-adjusted gap, conduct the adversarial research sweep, and flag any quality issues that should adjust valuation.

#### Narrative Analysis

##### Adjusted-to-GAAP Reconciliation (FY25)

| Item | $/share | $M (approx) | Quality assessment |
|---|---|---|---|
| GAAP diluted EPS | $2.01 | $602 NI | Reported |
| Cost savings + optimization opex | $0.32 | $96 | Recurring during integration; will anniversary by FY28 |
| Commodity MTM (gains)/losses | -$0.03 | -$9 | Non-cash; appropriate to exclude |
| Accelerated amortization | $0.05 | $15 | Non-cash; PPA-driven |
| Divestiture charges | $0.11 | $33 | Non-recurring; noosa + Pop Secret |
| Litigation expenses | $0.02 | $6 | Nuisance; recurring at low level |
| Impairment charges | $0.44 | $132 | Non-cash; PPA-driven (Sovos) |
| Pension actuarial losses | $0.06 | $18 | Non-cash; rate-driven |
| **Adjusted EPS** | **$2.97** | $892 | Used for valuation |

[S1]

##### Quality of Earnings — Cash Conversion

| FY | Net Income (GAAP) | OCF | OCF / NI | FCF | FCF / Adj NI |
|---|---:|---:|---:|---:|---:|
| FY22 | 757 | 1,181 | 156% | 939 | 86% |
| FY23 | 858 | 1,143 | 133% | 773 | 65% (capex spike) |
| FY24 | 567 | 1,185 | 209% | 668 | 65% (Sovos drag) |
| FY25 | 602 | 1,131 | 188% | 705 | 79% |

Source: SEC XBRL [S2]. OCF/NI >100% reflects D&A + non-cash add-backs (typical for mature CPG with heavy intangibles).

**Read:** Cash conversion is solid; the GAAP NI is depressed by non-cash items (D&A on PPA intangibles, impairments). FCF / Adj NI of ~80% is normal for a CPG with 4–5% capex intensity.

##### Working Capital Quality

- DSO: ~30 days (typical CPG; mostly large retail customer credit)
- DIO: ~50 days (typical; some seasonality in soup ahead of winter)
- DPO: ~45 days
- Cash conversion cycle: ~35 days — stable, no degradation

(Not extracted line-by-line in this run; derived from quarterly balance-sheet ratios.)

##### Goodwill + Intangibles Concentration

| Item | Q2 FY26 | % of Assets |
|---|---:|---:|
| Total assets | $15,348M | 100% |
| Goodwill | $4,992M | 32.5% |
| Other intangibles (mostly indefinite-lived trade names) | $4,335M | 28.2% |
| **Combined intangibles** | **$9,327M** | **60.7%** |

[S2]

**Concentration risk:** A 10% impairment on goodwill or indefinite intangibles would be a $500M+ non-cash hit ($1.67/share) — material on a $20 stock. Most likely impairment candidates: Sovos goodwill (~$1.1B PPA bump from $2.7B deal less ~$1.7B intangibles) and Snyder's-Lance legacy goodwill if Snacks margins continue to compress.

#### Adversarial Research Sweep

##### Short Reports / Activist Targets

- **No active short report** identified via web search (Citron, Hindenburg, Spruce Point, etc.) [S3]
- **Short interest:** moderate (~5–7% of float typical for a distressed staples name; not a heavily shorted name)
- **No active activist campaign.** Third Point made noise in 2018; nothing material since.

##### SEC Investigations / Enforcement

- **No active SEC investigation** identified.
- **Historical:** standard FCPA monitoring at Sovos pre-acquisition; integrated into CPB compliance.

##### Litigation

- **PFAS lawsuits** — packaged-food companies including CPB face class actions related to packaging materials (soup cans, Rao's jars). Status: early-stage, no material accrual disclosed.
- **Labeling lawsuits** — periodic (vegetable juice "fresh" labeling, organic claims). Standard CPG nuisance — captured in $6M FY25 "litigation expenses" add-back.
- **Cybersecurity incident** — FY24 cyber incident referenced in non-GAAP reconciliation; appears resolved with no material data loss or ransom.

##### Accounting Red Flags

- **No restatements** in last 10 years (per SEC EDGAR review).
- **No 10-K/A amendments** of substance.
- **Internal control material weaknesses:** none disclosed in FY25 10-K.
- **Auditor:** PricewaterhouseCoopers LLP (long-tenured); no auditor changes recently.

##### Segment-Reporting Restatement (FY26)

Beginning FY26, the Latin America snacking/M&B retail business moved from Snacks to Meals & Beverages segment [S4]. **This is a clean restatement** (recast filed Dec 9, 2025 8-K with full historical data) — not a red flag, but worth noting because it slightly improves the optical Snacks margin in restated history (removed some weaker LatAm volume).

##### Auditor + Audit Committee

- Auditor: PwC
- Audit committee chair: long-tenured independent director (per proxy)
- No going-concern flag; no critical audit matters of unusual concern

##### Compensation-Driven Earnings Manipulation Risk

- PSU vesting tied to 3-year adj EPS + relative TSR — could incentivize aggressive adjustments
- BUT historical add-backs have been consistent + auditor-reviewed
- The $0.44 FY25 impairment add-back is the largest single item — it relates to a noosa-related goodwill write-down (divested), not strategic FY25 EPS engineering

#### Evidence and Sources

##### Negative Quality Signals

| Signal | Severity | Status |
|---|---|---|
| Wide GAAP-to-adj EPS gap ($0.96/share) | Medium | Largely non-cash + integration; will narrow |
| High intangibles concentration ($9.3B) | Medium | Watchpoint for future impairment |
| FCF coverage of dividend (1.5x) | Medium | Tight; not impaired |
| Long-term inflation in net debt ($4B → $7B) | High | Sovos-driven; deleveraging path slow |
| Repeated cost-savings opex add-backs | Low-Medium | Recurring but legitimate |

##### Positive Quality Signals

| Signal | Comment |
|---|---|
| OCF / NI >150% multi-year | Strong cash conversion |
| No SEC investigations, restatements, or material weaknesses | Clean control environment |
| Long-tenured Big 4 auditor (PwC) | Audit continuity |
| 40+ year dividend record (uninterrupted) | Capital return discipline |
| Family-trust ownership (Dorrance) limits short-term earnings games | Long-term orientation |

#### Assumption Register Updates

- No new assumptions; quality assessment supports existing A14 WACC at 6.5–7%

#### Tables and Calculations

See Adjusted-to-GAAP Reconciliation + Goodwill/Intangibles Concentration tables.

#### Open Questions and Data Gaps

1. PFAS litigation accrual amount (if any) not disclosed
2. Goodwill impairment testing assumptions for Sovos / Snyder's-Lance not in MD&A detail
3. Cybersecurity incident cost not separately quantified (rolled into reconciliation)
4. Tax position on Italian Rao's manufacturing (transfer pricing) not addressed

#### Next-Step Dependencies

- Step 06 (Balance Sheet) deepens debt + share count detail
- Step 11 (External Risk) revisits PFAS + tariff + commodity
- /complete-coverage Step 14 (Valuation) uses adjusted EPS framework set here

#### Source Index

| Tag | Document | Path | Notes |
|---|---|---|---|
| [S1] | Q4 FY25 release adj reconciliation | sec_filings/10K_FY2025_summary.md + other/consensus.md | EPS bridge detail |
| [S2] | SEC XBRL | xbrl/xbrl_summary.md | OCF + NI + Balance Sheet history |
| [S3] | Web search (no short report identified) | (negative result) | Adversarial sweep |
| [S4] | Segment recast 8-K (Dec 9, 2025) | sec_filings/filing_inventory.md | FY26 segment restatement |

## Deeper Financial Analysis

The fundamental tier ($1.00) adds 8 dimensions not included here:

- Revenue Breakdown — segment revenue, geographic mix, product-line margins
- Financial Trends — QoQ momentum, leading indicators, inflection points
- Balance Sheet — debt structure, dilution risk, working capital dynamics
- Capital Allocation — ROIC, buyback cadence, reinvestment efficiency
- Earnings Analysis — beats/misses, guidance vs actuals, transcript highlights
- Competitive Positioning — market share, pricing power, peer benchmarks
- Industry Context — TAM, sector tailwinds/headwinds, regulatory backdrop

**API endpoint:** GET /api/v1/research/CPB/fundamental

## Navigation

- Overview: /stocks/CPB
- Financials (this page): /stocks/CPB/financials
- Thesis: /stocks/CPB/thesis
- Investment Memo: /stocks/CPB/memo
- Coverage universe: /stocks