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A higher or lower P/E often reflects what investors think about future growth and risk. Strong growth expectations or lower perceived risk can support a higher P/E, while slower growth or higher risk tends to justify a lower one.

Campbell’s currently trades on a P/E of 14.4x. That sits below the Food industry average of about 21.2x and also below the peer group average of 15.8x. Simply Wall St goes a step further with its proprietary “Fair Ratio” of 19.1x for Campbell’s, which estimates the P/E you might expect given factors such as earnings growth, industry, profit margins, market cap and key risks.

This Fair Ratio is more tailored than a simple peer or industry comparison because it weighs company specific characteristics rather than treating all food companies as alike. Since Campbell’s current P/E of 14.4x is meaningfully below the Fair Ratio of 19.1x, the shares appear inexpensive on this measure.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1417 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to think about valuation, so let us introduce you to Narratives, which are simply your own story about Campbell’s linked directly to numbers such as fair value, future revenue, earnings and margins.

On Simply Wall St’s Community page, used by millions of investors, you can create or follow Narratives that connect what you believe about Campbell’s business to a concrete forecast and then to a fair value. You can then quickly compare that fair value with the current share price to help decide whether the stock looks attractive or not for you.

Because Narratives on the platform update automatically when new information such as news or earnings is added, your story and valuation stay current without you having to rebuild your view from scratch each time.

For example, one Campbell’s Narrative on the Community page might assume a higher fair value based on stronger revenue and margin assumptions, while another assumes a lower fair value based on more conservative expectations. You can see both side by side to judge which better matches your outlook.

Do you think there’s more to the story for Campbell’s? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include CPB.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com