Shares of broth behemoth Campbell Soup (NYSE:CPB) fell today after the company announced so-so earnings. Campbell barely beat on earnings and missed slightly on sales, but the bigger issue was the measly 1% organic growth, which indicates a lack of demand for the company's products. On top of that, Campbell lowered guidance, sending investors running for the hills.
But where are all of these challenges for Campbell coming from? Motley Fool analyst Jason Moser thinks it's because we're in the middle of a shift in the way people think about what they eat. While we're all familiar with Campbell, companies like Whole Foods and Trader Joe's are offering their own compelling private-label brands and taking away market share. This forces Campbell to compete more on pricing, as well as think about acquiring more, which is an expensive way to find growth.
But is that reason enough for investors to stay away? On today's Stock of the Day, Jason says yes -- he doesn't see a surge in demand for soup coming anytime soon, and considering Campbell isn't even a $15 billion company, he doesn't like the prospect of it having to pay for growth going forward.
John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors. Mark Reeth has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.