No-Moat Smucker's Q3 Lacks Flavor; We Don't Think Investors Should Brew Up a Stake

We don’t expect a material change to our $139 fair value estimate for Smucker after digesting mixed third-quarter results, leaving shares a bit overvalued. Organic sales popped 11%, as a 15% benefit from pricing was partially offset by a 4% drawdown from volume and unfavorable mix. Management attributed this to a pullback in its premium coffee arm, as consumers seem to be selectively ratcheting back their spending by trading down to lower-priced fare. However, Smucker’s Uncrustables line (which caters to value-seeking consumers) remains a hero in its mix, with sales up 38% in the recent three-month period, on its way to $650 million in sales this year.