Is Campbell's (CPB) a Bargain Buy for Income Investors?

In the shadow of a struggling consumer staples sector, Campbell's Soup Company (CPB) has emerged as a polarizing name for income-focused investors. With a 5.5% dividend yield and a price-to-earnings (P/E) ratio of 14.81 as of December 2025 according to fullratio.com, the stock appears undervalued at first glance. However, the company's 184.57% debt-to-equity ratio according to Yahoo Finance and a payout ratio of 80.4% according to fullratio.com raise critical questions about its ability to sustain dividends amid macroeconomic headwinds. This analysis evaluates whether CPB's valuation and dividend profile justify its appeal for long-term income investors, while dissecting its competitive position in a sector grappling with shifting consumer preferences and margin pressures.

A Discounted Valuation in a Defensive Sector

Campbell's current P/E ratio of 14.81 is significantly below the Consumer Staples sector's 21.47 multiple according to worldperatio.com, suggesting the market is pricing the stock at a discount relative to its peers. This gap widens when comparing CPB's forward P/E of 12.50 according to Yahoo Finance to the sector's 5-year average P/E of 23.78 according to worldperatio.com. Analysts at Simply Wall St note that CPB's P/E is also 39% below its 10-year historical average of 24.3 according to fullratio.com, reinforcing the argument that the stock is trading at a cyclical low.

The company's price-to-free-cash-flow (P/FCF) ratio of 12.47 according to stockanalysis.com further underscores its affordability. While sector-wide P/FCF data remains elusive, Campbell's free cash flow (FCF) is projected to grow from $671 million in 2025 to $922 million by 2035 according to Yahoo Finance, outpacing the sector's 4.1% compound annual growth rate (CAGR) in market value according to transparency market research. This trajectory, coupled with a trailing FCF yield of 2.3% calculated from fullratio.com, positions CPB as a compelling value play for investors prioritizing cash flow generation.

Dividend Sustainability: A Double-Edged Sword

Campbell's 5.5% yield according to fullratio.com is among the most attractive in the sector, but its sustainability hinges on the company's ability to balance debt servicing with dividend obligations. The 80.4% payout ratio according to fullratio.com-calculated using 2025 earnings-leaves little room for error, particularly as the company's debt load remains elevated. While management has signaled confidence in maintaining the dividend according to Simply Wall St, the 184.57% debt-to-equity ratio according to Yahoo Finance suggests refinancing risks could emerge if interest rates remain sticky.

However, recent earnings reports offer a glimmer of hope. Campbell's exceeded consensus estimates in Q3 2025 despite a 2.1% sales dip according to GuruFocus, driven by cost-cutting measures and pricing discipline. Analysts at Fidelity note that the company's focus on "operational efficiency" could stabilize margins according to Fidelity, providing a buffer for dividend preservation. For income investors, the key question becomes whether Campbell's can reduce leverage while maintaining its current payout-a challenge that will require disciplined capital allocation.

Sector Dynamics: A Defensive Play in a Weak Market

The Consumer Staples sector, while defensive in nature, has underperformed broader markets in 2025 due to inflationary pressures and shifting consumer spending patterns according to AOL. Yet, this weakness has created opportunities for value investors. Campbell's P/E discount to the sector average implies the market is pricing in pessimistic earnings assumptions, which may not materialize given the sector's inherent resilience.

Peer comparisons further highlight CPB's appeal. Its P/E of 14.7x is slightly above the 13.9x average of direct peers according to Simply Wall St, but its FCF growth projections outpace those of companies like PepsiCo with 3.3% revenue growth and United Natural Foods with 100%+ earnings growth. While direct P/FCF benchmarks for peers are unavailable, Campbell's 12.47 multiple appears reasonable for a company with improving cash flow visibility.

Risks and Considerations

Investors must weigh several risks before committing to CPB. First, the company's high debt load could limit flexibility during economic downturns. Second, the consumer staples sector's "Marketperform" rating from Schwab according to Schwab suggests limited upside potential in a low-growth environment. Finally, Campbell's reliance on core brands like Campbell's Soup and V8 leaves it vulnerable to changing dietary trends, such as the shift toward plant-based alternatives.

Conclusion: A Calculated Bet for Income Investors

Campbell's presents a classic value-income paradox: an attractive yield and discounted valuation, tempered by structural risks. For investors with a 5–7 year time horizon and a tolerance for moderate risk, CPB could serve as a high-yield complement to a diversified portfolio. However, the company's debt burden and sector dynamics necessitate close monitoring. If Campbell's can execute its cost-cutting initiatives, reduce leverage, and maintain pricing power, its 5.5% yield may prove sustainable. Conversely, a deterioration in margins or refinancing challenges could pressure the stock.

In a market where defensive sectors are out of favor, Campbell's offers a rare combination of income and value-but only for those willing to navigate its complexities.