Campbell Soup Co–Risk Profile
- As per GlobalData's proprietary risk methodology, Campbell's overall risk score is 3.27, signifying medium risk
- Country and operational risk pillars have boosted the overall risk profile of the company
- The financial risk of the company is high as compared to its peers due to its high debt and low liquidity ratios
Campbell Soup Co has a strong risk profile and is one of the leading companies based on our proprietary risk assessment of the food sector in the consumer industry. Country and operational risk pillars boosted the overall risk score for Campbell Soup Co. Operational excellence, focus on R&D, and brand offerings are the company's major strengths. Declining revenues and customer concentration continue to weigh down on its risk profile.
About the Company
Campbell Soup Co (Campbell) produces and sells convenience food and beverage products. The company's product portfolio includes soups, broths, stock products, cookies, crackers, biscuits, baked products, sauces, refrigerated and salad dressings, dips, and snacks. Campbell markets its products under several brands, including Pepperidge Farm, Campbell's, Spaghettios, Chunky, Late July, Kettle, Swanson, Emerald, Pop Secret, Cape Cod, V8, Snyder's-Lance, Snyder's of Hanover, Pace, Prego, and GoldFish.
Campbell is one of the leaders in the food industry, with a market cap of $13.33 billion. It reported revenue of $8.47 billion in financial year (FY) 2021, which decreased 2.47% over that in FY2020. The company's net income also declined 38.45% in FY2021 compared to that in FY2020.
Risk Pillars
Our proprietary risk assessment uses a combination of four risk pillars – Country, Industry, Operational, and Financial. Scores are based on a scale of 1 to 5, 1 being the lowest risk and 5 being the highest.
Campbell has an average risk profile in the food sector, while companies like Dali Foods Group Co Ltd, Calbee Inc, and Foshan Haitian Flavoring Food Co., Ltd. lead the sector. The company's country and operational risk pillars fare better than the other risk pillars.
Country Risk: Campbell has a significant presence in the US, from where it derives the majority of its revenue (93.94%). The company has a country risk score of 4.88.
Industry Risk: The company generates 95.66% of its revenue from the food sector, which is characterized by low-profit margins and weak growth projections compared to other sectors. This has resulted in an average industry score of 3.
Operational Risk: Our operational risk score is based on four pillars – business positioning, scale, operational efficiency, and profitability. The operational score of the company is strengthened by strong operational efficiency, higher profitability. and larger scale of operations compared to its peers. The low cost of goods sold boosted the operational efficiency pillar. Higher EBIT margins also increased profitability.
Financial Risk: Campbell's cash flow, interest coverage, leverage, and liquidity ratios affected the overall financial score. Low liquidity ratios and higher debt to equity ratios have impacted the company's overall financial risk score.
About our Methodology:
GlobalData risk scorecard for a sector provides the analysis of various risks a company is vulnerable to. Our risk framework comprises four pillars – country, industry, operational and financial. The country risk for an entity signifies the risk of operating in a particular country. GlobalData's proprietary country risk assessment framework is used to calculate the risk for individual countries. Industry risk is an integral part of risk analysis, and it implies the riskiness and stability of the industries in which a company operates. The operational and financial risk profile comprises a company's risk and returns potential based on its critical operational and financial metrics. Our scores are based on an average of the latest three fiscal year data.
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