In Tuesday’s trading, 11 NYSE and 44 Nasdaq stocks hit new 52-week lows, while 25 NYSE and 24 Nasdaq stocks hit new 52-week highs. 

Among the 11 new NYSE 52-week lows were two food-related consumer staples stocks: General Mills (GIS) and Campbell’s (CPB). Both hit their 22nd 52-week low of the past 12 months.   

Remarkably, both stocks are down between 20% and 21% over the past year, with the former down slightly less in 2025, 12% to 13.9%. 

On the one hand, it’s easy to understand why they’re not doing well. The tariff and trade war will raise their input costs. On the other hand, uncertain times usually attract defensive plays, such as consumer staples stocks.

Which argument will win out? That’s the million-dollar question. 

Let’s consider whether either is worth owning at current prices.  

Their Valuations Are Similar

According to Barchart’s Overview page, here are the two stocks' key ratios:

Campbell’s

General Mills

If you multiply the four key ratios: P/S, P/CF, P/B, and P/E, you get a product of 293.3 for Campbell’s and 619.1 for General Mills. From that back-of-the-napkin perspective, Campbell’s is the cheaper of the two stocks. In fact, by all four ratios, Campbell’s is the cheaper of the two. 

Over the past five years, CPB stock is down 28.5%. That compares to -5.8% for GIS. Meanwhile, the S&P 500 and Dow Jones Industrial Average returned 96.5% and 70.8%, respectively. Lastly, the Consumer Staples Select Sector SPDR Fund (XLP), representing the 38 consumer staples stocks from the S&P 500, is up 41% over the same period. 

Consumer staples stocks like Costco (COST) and Walmart (WMT), the top two holdings in XLP, have much higher multiples for all four ratios. The product of Costco’s four is 77,915.7, while Walmart’s is 7,662.3. 

Based on this simplistic comparison, CPB and GIS are cheap, but there’s usually a reason for the low valuation.

What’s Their Problem?

For starters, growth’s been hard to come by. 

Over the past five years, Campbell’s has grown revenue from $8.11 billion in fiscal 2019 (July year-end) to $9.64 billion in 2o24, a compound annual growth rate (CAGR) of 3.5%. 

Over the same period, General Mills has grown revenue from $16.87 billion in fiscal 2019 (May year-end), to $19.86 billion in 2o24, a compound annual growth rate (CAGR) of 3.3%. 

While these growth numbers sound terrible, they wouldn’t be an issue if its margins were getting stronger. That’s not happening. 

Campbell’s gross profit margin is down 200 basis points between 2019 and 2024 to 31.3%, according to S&P Global Market Intelligence. General Mills’ gross profit margin has gone sideways from 34.7% five years ago to 35.0% in 2024.   

In terms of levered free cash flow (LFCF)--defined as the cash available to the company after making all its financial obligations--Campbell’s latest 12-month (LTM) LFCF through the end of January was $493.4 million, the lowest it’s been in the past five years. General Mills’ LTM LFCF was $1.19 billion, also lower, but higher than in 2021. 

Campbell’s current LFCF margin is 4.9%, while General Mills’ is 6.1%. 

This explains some of the difference in valuation as the latter generates 20% more cash from each dollar of revenue.  

Why Consider a Bet?

While leaning toward General Mills, I’ll consider other things that could factor into a recommendation to buy either stock. 

The balance sheet is always an essential consideration for any stock. The Altman Z-Score is something I use to evaluate a company’s financial situation. 

It predicts the likelihood of bankruptcy proceedings for a company in the next 24 months. Like all metrics, it’s not infallible, but it considers the balance sheet, income statement, and capital structure. 

The Altman Z-Score constantly changes based on quarterly results, market cap, etc. So, it can move higher with improvements in results. 

Campbell’s and General Mills Altman Z-Scores are 2.01 and 2.77, respectively. Anything over 1.81 is considered not distressed. In January 2020, the former was 2.13, while the latter was 2,36. Campbell's highest Altman Z-Score over the past five years was 2.76 in July 2023, while General Mills’ was 3.20 in August 2023. In both cases, the share prices were higher than today. 

The last comparison I’ll consider is EBIT (earnings before interest and taxes) as a multiple of interest expense. Campbell’s EBIT is 4.4x its net interest, while General Mills’ is 7.0x, 59% higher. 

The Bottom Line

Both stocks have similar dividend yields of around 4.3%. If you’re dividend-focused, those are healthy yields, although the important thing is that they continue to raise the dividend. 

Campbell’s paid a static $0.37 a share dividend from Q2 2022 through Q1 2025, increasing it to $0.39 in Q2 2025. General Mills paid a static dividend of $0.51 per share from Q2 2021 through Q4 2022. It’s increased its dividend in each of the last three fiscal years to $0.60 a share. It should raise it again in August. 

General Mills (I also like its pet care business) is the better buy for all the above reasons. 

GIS stock traded at an all-time high of $90.89 on May 1, 2023. I don’t see it returning there in the next 12-24 months. 

I like the Jan. 15/2027 $55 call. The ask price is 14.4% of the strike price. You have nearly 21 months for GIS to reach $62.90 and break even. The probability of this happening is 38.07%.

On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.