The J. M. Smucker Company (SJM), founded in 1897 and headquartered in Orrville, Ohio, is a prominent leader in the food and beverage industry. With a market cap of $12.1 billion, Smucker is celebrated for its trusted brands and innovative approach to packaged food solutions. The company produces a diverse portfolio of products, including spreads, coffee, pet food, and snacks, and operates with a commitment to quality and sustainability that resonates with consumers worldwide.
Shares of this leading consumer packaged goods company have underperformed the broader market considerably over the past year. The stock has gained 6% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 32.1%. In 2024, SJM stock is down 5%, while SPX is up 26.2% on a YTD basis.
Narrowing the focus, SJM has underperformed the First Trust Nasdaq Food & Beverage ETF (FTXG), which has climbed 1.2% on a YTD basis.
J.M. Smucker has underperformed the broader market this year, facing challenges in its coffee segment due to heightened competition and shifting consumer preferences, alongside supply chain disruptions and rising input costs. However, Q3 earnings results, released on Nov. 26, drove a 5.7% increase in shares, reflecting solid financial performance.
Revenue grew 17.2% year-over-year to $2.27 billion, aligning with estimates, while adjusted EPS of $2.76 beat expectations by 10.2%. Adjusted EBITDA reached $554.3 million, exceeding forecasts by 5.5% with a 24.4% margin.
Plus, the management raised its full-year adjusted EPS guidance to $9.90 at the midpoint, a 1% upward revision. Despite the operating margin declining to 7.5% from 15.4% last year, the free cash flow margin improved significantly to 14%, demonstrating enhanced cash generation.
For the current fiscal year, ending in April 2025, analysts expect SJM’s EPS to decline 1.5% to $9.79 on a diluted basis. The company’s earnings surprise history is impressive. It beat the consensus estimate in each of the last four quarters.
Among the 14 analysts covering SJM stock, the consensus is a “Moderate Buy.” That’s based on four “Strong Buy” ratings, nine “Holds,” and one “Strong Sell.”
This configuration is less bullish than a month ago, with five analysts suggesting a “Strong Buy.”
On Nov. 21, TD Cowen analyst Robert Moskow maintained a “Buy” rating on SJM stock with a price target of $132, implying a potential upside of 9.9% from current levels.
The mean price target of $124.14 represents a 3.4% premium to SJM’s current price levels. The Street-high price target of $135 suggests an upside potential of 12.4%.
