Why Campbell's Soup Stock Plummeted by 16% in September

Going into September, general sentiment on the food industry wasn't particularly positive. One of the reasons inflation continues to be an issue in the U.S. is the rise in food prices, and companies in the comestibles industry are feeling the pinch.

The fiscal fourth-quarter results Campbell's (NASDAQ:CPB) reported during the month did little to improve this outlook. Across the month, the famous soup specialist saw its share price erode by more than 16%. This is a storied company that has survived worse times, so to me, its equity looks attractive after its decline.

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No comfort food this time

Going into the month, an analysis from Bank of America (NYSE:BAC), published on Aug. 31, set a bearish tone for the food business. The big bank's analysts pointed out that the U.S. food consumer price index increased by 3% year-over-year in July, with costs rising in many categories (cereal, beef, chicken, and eggs, among numerous others).

This is due in large part to the two major global conflicts at the moment, the U.S.-Iran war and the fight between Ukraine and Russia. The bank's team of pundits pointed out that the former is affecting oil prices in particular, which makes it more expensive for food producers to transport their wares where they need to go. As for the latter, it's disrupted grain exports; wheat prices have risen by 39% year to date, according to the analysis.

So it wasn't a surprise when Campbell's fiscal fourth-quarter 2026 results were, as expected, generally down on a comparative basis. Net sales for the frame declined by 8% to $2.1 billion, while net income not under generally accepted accounting principles (non-GAAP, or adjusted) fell by 25% to $242 million ($0.39 per share).

The earnings per share (EPS) figure matched the analyst consensus. Revenue was slightly below the $2.15 billion collectively expected by those Campbell's-tracking pundits.

In a tough inflationary environment, Campbell quoted CEO Mick Beekhuizen as saying that the company is "taking decisive action" to cope. This includes a "reset" -- cut, in other words -- of the quarterly dividend. Going forward, it will be $0.25 per share, down 36% from the previous $0.39.

Time to be contrarian

Campbell also proffered guidance for the entirety of the new fiscal year. It believes its net sales will be 2% to 4% below the 2026 result, and adjusted EPS will tumble by 17% to 24% (in dollar terms, $1.65 to $1.80). The latter range is notably below the already modest expectations of analysts, whose consensus is $1.90.

It's easy to be down on the food sector these days, and Campbell's -- purveyor of classic comfort food like its familiar lineup of soups -- is a convenient poster boy for this. But I'd point out that it's still one of the more durable and popular brands on supermarket shelves, and even with that deep cut to the payout, it remains in high-yield dividend territory (over 5%). Inflation will cool when the world becomes more peaceful, and as ever, Campbell's will be feeding hungry consumers. I'd consider this a bargain stock worth considering as a buy, particularly for income investors.

Bank of America is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends Campbell's. The Motley Fool has a disclosure policy.