Episode Details

The Campbell's Company (CPB) Q4 FY2026 — Shares fell 6.9% to $22.13 on roughly seven times average volume after Campbell's cut its quarterly dividend 36% and guided fiscal 2027 below where the leverage ratio actually improves. Campbell's generated $1,039 million of operating cash flow in fiscal 2026 and ended the year owing $280 million more in gross borrowings than when it started. This morning it cut the dividend 36% explicitly to accelerate debt reduction - but the same release guided adjusted EBIT down enough that net debt to EBITDA does not actually improve in fiscal 2027, even in the company's best case. THE CALL: HOLD (3/5, MODERATE) — base-case value ~$21.82 vs ~$22.13 today. KEY METRICS: - Dividend cut 36% - $0.39 to $0.25 quarterly, $1.56 to $1.00 annualized - Gross borrowings $6,857M to $7,137M, +$280M, despite $1,039M of operating cash flow - Net debt / adjusted EBITDA: FY2025 3.50x -> FY2026 4.23x -> FY2027E 4.21x best / 4.55x worst - Adjusted EPS trail: FY24 $3.08 -> FY25 $2.97 -> FY26 $2.17 -> FY27E $1.65-$1.80 - Impairments $293M over two years (Kettle Brand, Cape Cod, Snyder's of Hanover), all excluded from adjusted EPS - FY2026 missed its own guidance on all four metrics - sales -3.4% vs a -2%/0% guide - Cost-savings target raised twice: $250M by FY2028 -> $375M by FY2028 -> $500M by FY2030 - Street average target $20.12 across 9 firms vs our fair value $21.82 What to watch: Two quarters of positive Snacks organic volume, or net debt to adjusted EBITDA improving below roughly 4.2x at the December Q1 FY2027 print, would move the call toward a buy; another guidance miss on the FY2027 numbers would not. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.