JM Smucker Earnings: Decent Fiscal Q3 Results, but Higher Costs From M&A Lead to Lower Valuation

On initial review of its (January-ended) fiscal third-quarter 2024 results, we expect to lower no-moat Smucker’s fair value estimate of $138 per share by a low-single-digit percentage, partially due to higher marketing spending and stranded costs from divested assets lingering longer than we thought. Over the past three months, shares have gained about 8%, far outpacing the single-digit-percentage losses for other packaged food companies we cover. Thus, we see more attractive upside in narrow-moat General Mills, which currently trades 17% below our fair value estimate.