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JM Smucker Co SJM

Morningstar Rating
$122.64 −2.61 (2.08%)
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Company Report

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.

Price vs Fair Value

SJM is trading at a 11% discount.
Price
$122.64
Fair Value
$563.00
Uncertainty
Medium
1-Star Price
$227.10
5-Star Price
$88.60
Economic Moat
Hwgqg
Capital Allocation
Hcgd

Bulls Say, Bears Say

Bulls

Even after paring back its pet exposure, Smucker has retained ownership of its strongest pet brands, which could allow it to benefit from the continued trend of increased pet ownership and spending.

Bears

Paying a full price for Hostess Brands has increased the difficulty for Smucker to create value from the acquisition while also significantly adding to its debt load.

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News

Trading Information

Previous Close Price
$125.25
Day Range
$119.67126.84
52-Week Range
$107.33159.92
Bid/Ask
$123.00 / $123.75
Market Cap
$13.02 Bil
Volume/Avg
3.4 Mil / 1.4 Mil

Key Statistics

Price/Earnings (Normalized)
12.71
Price/Sales
1.56
Dividend Yield (Trailing)
3.42%
Dividend Yield (Forward)
3.46%
Total Yield
9.05%

Company Profile

J.M. Smucker is a packaged food company that primarily sells through the U.S. retail channel (77% of forecast fiscal 2024 revenue), with the remaining share consisting of Hostess, foodservice, and international (primarily Canada). Following the divestiture of several pet foods brands and private-label products that constituted about $1.5 billion of sales, retail coffee is now its largest category (33% of sales) with brands Folgers and Dunkin’. Pet foods (22% of sales) holds leading brands like Milk-Bone and Meow Mix. Of its remaining, approximately 22% comes from consumer foods, primarily peanut butter and jelly, through brands Jif and Smucker’s. The company acquired Hostess Brands in fiscal 2024 to boost its snack and convenience store presence.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Mid Value
Total Number of Employees
5,800

Competitors

Valuation

Metric
SJM
CAG
GIS
Price/Earnings (Normalized)
12.7110.1714.50
Price/Book Value
1.721.483.89
Price/Sales
1.561.101.88
Price/Cash Flow
10.527.1511.81
Price/Earnings
SJM
CAG
GIS

Financial Strength

Metric
SJM
CAG
GIS
Quick Ratio
2.530.270.30
Current Ratio
3.200.910.64
Interest Coverage
1.603.437.71
Quick Ratio
SJM
CAG
GIS

Profitability

Metric
SJM
CAG
GIS
Return on Assets (Normalized)
6.30%5.93%8.39%
Return on Equity (Normalized)
13.29%14.97%26.03%
Return on Invested Capital (Normalized)
8.76%9.01%13.30%
Return on Assets
SJM
CAG
GIS
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Packaged Foods Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
NSRGY
Nestle SA ADRPsjx$279.0 Bil
KHC
The Kraft Heinz CoBkzp$43.4 Bil
DANOY
Danone SA ADRDrspvfr$42.2 Bil
GIS
General Mills IncCszshx$36.5 Bil
K
Kellanova CoNwhfypc$19.0 Bil
MKC
McCormick & Co Inc Registered Shs Non VtgHhthd$18.2 Bil
HRL
Hormel Foods CorpBccfwy$16.9 Bil
LW
Lamb Weston Holdings IncLwnrykg$14.6 Bil
CAG
Conagra Brands IncBhgp$13.4 Bil

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