Campbell Soup (CPB) has been paying down debt for the last 4 years and has recently fallen below 3x Debt / EBTIDA. Additionally, should the company maintain the current debt levels more than $1B of free cash flow would be unlocked and available for distributions, buybacks and acquisitions. Holding debt payments aside, this stock is yielding ~9% in FCFE at current market prices. EV / EBITDA is <10x, a level not seen since 2011.
The forecast for this company is weak, 1% EBITDA and FCFE growth which is consistent with its history. Not amazing, however the opportunity for a Trifecta exists with 1% EBITDA growth, EV / EBITDA market multiple expansion from the low of 9x to average 12x, and possible increased share buybacks based on the extra +$1B of cash flow if debt levels are maintained at <3x.
This maybe worthy of a revisit. The stock has dropped after a expensive buy-out of Sovos Brands. It is now approching $40 mark that was originally reviewed by Cameron.
Kevin OBrien
This maybe worthy of a revisit. The stock has dropped after a expensive buy-out of Sovos Brands. It is now approching $40 mark that was originally reviewed by Cameron.