JM Smucker (SJM) AI Stock Analysis

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JM Smucker

(NYSE:SJM)

61Neutral

The JM Smucker Company shows a mixed outlook. Strong cash flow and positive technical indicators provide some strengths, but profitability issues and a negative P/E ratio are significant concerns. The company's efforts in brand growth and strategic debt reduction are promising, but challenges in profitability and valuation weigh down the overall score.

Positive Factors

Earnings and Margins

Fiscal third-quarter EPS were higher than consensus forecast, with gross margin slightly above expectations.

Growth Potential

J. M. Smucker Company is well positioned to deliver solid growth compared to center-of-store peers given its focused portfolio of leading brands in relatively attractive categories.

Valuation

The company's valuation is considered too low given the visibility to continued momentum for Uncrustables.

Negative Factors

Coffee Segment Challenges

Coffee volumes are modeled to decline by 12% with an EBIT decrease of 14%, highlighting potential challenges in the coffee segment.

Sales Performance

Revenues of $2,186.0m were -1.8% below consensus estimates, with an organic sales decline of -1.0% YoY.

Supply Chain Disruption

Management lowered its fiscal 2025 sales guidance due to supply chain disruptions in pet and softness in sweet baked goods.

JM Smucker (SJM) vs. S&P 500 (SPY)

Market Cap

$12.25B

Dividend Yield3.73%

Average Volume (3M)1.47M

Price to Earnings (P/E)22.2

Beta (1Y)0.16

Revenue Growth7.07%

EPS Growth-181.54%

CountryUS

Employees9,000

SectorConsumer Defensive

Sector Strength93

IndustryPackaged Foods

Share Statistics

EPS (TTM)-2.41

Shares Outstanding106,416,620

10 Day Avg. Volume1,315,920

30 Day Avg. Volume1,468,355

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)1.33

Price to Cash Flow (P/CF)12.20

P/FCF Ratio12.20

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$119.46

Price Target Upside5.69% Upside

Rating ConsensusHold

Number of Analyst Covering14

JM Smucker Business Overview & Revenue Model

Company DescriptionThe J. M. Smucker Company manufactures and markets branded food and beverage products worldwide. It operates in three segments: U.S. Retail Pet Foods, U.S. Retail Coffee, and U.S. Retail Consumer Foods. The company offers mainstream roast, ground, single serve, and premium coffee; peanut butter and specialty spreads; fruit spreads, shortening and oils, and frozen sandwiches and snacks; pet food and pet snacks; and foodservice hot beverage, foodservice portion control, and flour products, as well as dog and cat food, frozen handheld products, juices and beverages, and baking mixes and ingredients. It provides its products under the Meow Mix, 9Lives, Kibbles 'n Bits, Milk-Bone, Pup-Peroni, Rachael Ray Nutrish and Nature's Recipe, Folgers, Café Bustelo, Dunkin', Folgers, Café Bustelo, 1850, Jif, Smucker's, Smucker's Uncrustables, Robin Hood, and Five Roses. The company sells its products through direct sales and brokers to food retailers, club stores, discount and dollar stores, online retailers, pet specialty stores, natural foods stores and distributors, drug stores, military commissaries, and mass merchandisers. Smucker Company was founded in 1897 and is headquartered in Orrville, Ohio.

How the Company Makes MoneyThe J.M. Smucker Company generates revenue through the sale of its diverse range of food and beverage products. Its revenue model is primarily based on the production and distribution of branded consumer goods across its key segments: consumer foods, pet food, and coffee. In the consumer foods segment, Smucker's earns money from the sale of spreads, toppings, and packaged food products. The pet food segment contributes significantly to its earnings through popular brands like Milk-Bone and Meow Mix, catering to the growing pet care industry. The coffee segment, led by brands such as Folgers and Dunkin', generates revenue through various retail and foodservice channels. The company also benefits from strategic partnerships and licensing agreements that enhance its brand visibility and market penetration. Additionally, Smucker's invests in marketing and innovation to maintain and expand its market share, contributing to its overall financial performance.

JM Smucker Financial Statement Overview

Summary

The JM Smucker Company has strong cash flow metrics, indicating efficient cash generation. However, challenges with profitability and revenue growth are noted, as reflected in the negative net income and decreased EBIT and EBITDA margins. The balance sheet shows stability with improved debt-to-equity ratio but weakened return on equity.

Income Statement

Neutral

The company's gross profit margin for TTM (Trailing-Twelve-Months) is healthy but has shown volatility. Net income has turned negative, impacting the net profit margin significantly. Revenue growth is inconsistent, with a recent decline in revenue. EBIT and EBITDA margins have decreased, indicating a reduction in operating efficiency.

Balance Sheet

Neutral

The debt-to-equity ratio in the latest TTM period shows improvement due to reduced total debt, enhancing financial stability. However, the company's return on equity has weakened due to negative net income. The equity ratio remains stable, indicating a solid equity base relative to total assets.

Cash Flow

Positive

Free cash flow has seen positive growth, and the operating cash flow remains robust. The operating cash flow to net income ratio is strong due to operating efficiency, despite negative net income. The free cash flow to net income ratio is favorable, indicating efficient cash generation relative to earnings.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
8.79B	8.18B	8.53B	8.00B	8.00B	7.80B
	Gross Profit
3.47B	3.12B	2.80B	2.70B	3.14B	3.00B
	EBIT
331.20M	1.31B	1.17B	1.02B	1.39B	1.22B
	EBITDA
859.30M	1.69B	1.61B	1.63B	1.83B	1.73B
	Net Income Common Stockholders
-256.70M	744.00M	-91.30M	631.70M	876.30M	779.50M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
47.20M	62.00M	1.14B	169.90M	334.30M	391.10M
	Total Assets
18.43B	20.27B	14.99B	16.05B	16.28B	16.97B
	Total Debt
1.09B	8.56B	4.31B	4.49B	4.75B	5.62B
	Net Debt
1.04B	8.50B	3.66B	4.32B	4.42B	5.23B
	Total Liabilities
11.52B	12.58B	7.70B	7.91B	8.16B	8.78B
	Stockholders Equity
6.91B	7.69B	7.29B	8.14B	8.12B	8.19B
Cash Flow		Free Cash Flow
815.20M	642.90M	717.00M	718.80M	1.26B	985.50M
	Operating Cash Flow
1.24B	1.23B	1.19B	1.14B	1.56B	1.25B
	Investing Cash Flow
-121.90M	-3.96B	262.60M	-355.50M	311.10M	-271.50M
	Financing Cash Flow
-1.11B	2.14B	-964.60M	-944.50M	-1.94B	-688.70M

JM Smucker Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price113.03

Price Trends

50DMA

109.62

Positive

100DMA

109.51

Positive

200DMA

111.89

Positive

Market Momentum

MACD

2.19

Negative

RSI

67.18

Neutral

STOCH

86.60

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SJM, the sentiment is Neutral. The current price of 113.03 is below the 20-day moving average (MA) of 113.65, above the 50-day MA of 109.62, and above the 200-day MA of 111.89, indicating a neutral trend. The MACD of 2.19 indicates Negative momentum. The RSI at 67.18 is Neutral, neither overbought nor oversold. The STOCH value of 86.60 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SJM.

JM Smucker Risk Analysis

JM Smucker disclosed 31 risk factors in its most recent earnings report. JM Smucker reported the most risks in the “Production” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

JM Smucker Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PPC	76 Outperform	$11.85B	10.94	28.70%	―	2.93%	237.51%
CAG	70 Outperform	$12.74B	39.04	3.67%	5.25%	-3.15%	-65.38%
KHC	67 Neutral	$35.47B	13.14	5.56%	5.39%	-2.98%	-2.22%
GIS	66 Neutral	$32.64B	13.09	27.37%	4.01%	-2.62%	4.27%
CPB	66 Neutral	$11.57B	22.34	13.43%	3.87%	9.15%	-31.94%
Sector *	62 Neutral	$20.19B	14.01	-16.14%	3.22%	1.15%	3.41%
SJM	61 Neutral	$12.25B	22.22	-3.55%	3.73%	7.07%	-181.54%

* Consumer Defensive Sector Average

Performance Comparison

SJM

JM Smucker

113.03

1.47

1.32%

CPB

Campbell Soup

38.09

-4.12

-9.76%

CAG

Conagra Brands

25.99

-3.81

-12.79%

GIS

General Mills

58.63

-8.87

-13.14%

PPC

Pilgrim's Pride

49.47

18.24

58.41%

KHC

Kraft Heinz

28.53

-6.77

-19.18%

JM Smucker Earnings Call Summary

Earnings Call Date: Feb 27, 2025 | % Change Since: 3.55% | Next Earnings Date: Jun 5, 2025

Earnings Call Sentiment Neutral

The earnings call revealed strong performance in key brands like Uncrustables and Café Bustelo, along with increased earnings guidance and a strategic debt reduction plan. However, challenges such as supply chain disruptions, significant impairment charges in the Sweet Baked Snacks segment, and inflationary pressures on consumer spending were notable. While positive strides were made in brand growth and financial guidance, the negative impacts were considerable, making the sentiment balanced.

Highlights

Uncrustables Brand Growth

Net sales for the Uncrustables brand grew by 15% in the quarter, driven by national advertising, distribution gains, and new merchandising investments. The brand is expected to exceed $900 million in net sales this fiscal year.

Café Bustelo Sales Increase

Café Bustelo brand grew net sales by 15%, continuing its momentum of double-digit growth. The brand gained dollar and volume share in all segments it competes in.

Increased Earnings Guidance

The company raised its full-year adjusted earnings per share guidance to $10.00, reflecting improved gross margin expansion and earlier than anticipated synergies.

Debt Reduction Plan

The company plans to prioritize debt reduction by paying down over $800 million this fiscal year and $500 million annually in the next two years.

Lowlights

Supply Chain Disruptions

Supply chain disruptions negatively impacted results, particularly in the U.S. Retail Pet Foods and Milk-Bone brands, causing a $30 million impact in the third quarter.

Sweet Baked Snacks Segment Challenges

Net sales decreased 8% for Sweet Baked Snacks, driven by declines in snack cakes and private label products. The segment also faced a $794 million impairment charge related to goodwill.

Impact of Inflation and Consumer Spending

Consumers continue to be selective in their spending due to inflationary pressures, affecting the sweet baked goods category and causing slower recovery than anticipated.

Decrease in Comparable Net Sales

Comparable net sales decreased 1%, reflecting a 5 percentage point decrease from volume mix, primarily driven by decreases for coffee and dog snacks.

Company Guidance

In the third quarter of fiscal year 2025, The J. M. Smucker Company experienced a slight decrease in net sales by 2%, with comparable net sales down by 1% as a result of supply chain disruptions and divested businesses. However, the company increased its full-year guidance for adjusted earnings per share to a range of $9.85 to $10.15 and raised its free cash flow projection to $925 million. The Uncrustables and Café Bustelo brands both saw notable 15% net sales growth, while the Milk-Bone brand faced supply chain challenges but is expected to recover in the fourth quarter. The Sweet Baked Snacks segment underperformed, leading to a $794 million goodwill impairment charge and a $208 million trademark impairment charge. Despite these challenges, adjusted earnings per share rose by 5% to $2.61, driven by improved gross margins and disciplined cost management. The company also anticipates a 7.25% increase in full-year net sales, factoring in the Hostess Brands acquisition and strategic pricing actions, particularly in the coffee segment.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.