Earnings Preview: J.M. Smucker Set to Report August 17
J.M. Smucker (NYSE: SJM) is expected to report first-quarter earnings on Friday, August 17 before market open. Analyst consensus expects the company to report earnings per share (EPS) of $0.99 on revenue of $1.3 billion.
Monday's upgrade to Buy at Goldman Sachs led shares of the company to cross the 200-day moving average, exchanging hands at $78.37 before closing at $77.91 - up 1.58 percent from Friday's close.
Not Just Jelly: The Company and Recent M&A
J.M. Smucker's portfolio includes household brands Pillsbury, Millstone coffee, Knott's, Folgers, Hungry Jack, Jif and Crisco. Smucker acquired Jif and Crisco from Proctor & Gamble (NYSE: PNG) in 2002 and Folgers in 2008. The company manufactures and markets a wide variety of produce products in the United States and Canada.
J.M. Smucker busied itself in Q1, acquiring a majority of Sara Lee Corporation's spun-off food service, hot beverage and coffee business in January as well as staking a 25 percent equity interest in China oat products manufacturer Guilin Seamild Biologic Technology Development in March.
Earlier in 2011, J.M. Smucker acquired Rowland Coffee Roasters for $360 million.
The company boosted its dividend in July by around 8 percent from $0.48 to $0.52.
Goldman Sachs' notable upgrade Monday, based on "best-in-class" shareholder return, end-user growth for company brand demand and "advantaged cost profile," caused the investment bank to raise its price target for J.M. Smucker from $85 to $90 in addition to the rating change.
In the report, Goldman Sachs stated, "SJM's input cost outlook remains favorable given high coffee and peanut exposure – an attribute that is becoming increasingly scarce. And its heavy exposure to the coffee category's secular premiumization trend offers a sustained sales growth advantage. . .The combined cost and demand dynamics fuel our above consensus estimates this year and beyond."
Deutsche Bank reiterated its Buy rating on J.M. Smucker in a report published Monday, stating that the agency expects, "sequential improvement" through factors including new consumer products and lowered prices.
"At the start of 2012, we pointed to Smucker as our 'top pick.' With inflation and weak volume, our conviction has been tested. But as time passes, we continue to believe moderating inputs (primarily coffee), volume recovery, productivity, solid balance sheet and 6-7% C2013 FCF yield point to the shares as undervalued."
The two reports were notably bullish for the company.
Of thirteen surveyed analysts covering J.M. Smucker, six have a Hold rating on the company and seven provide a Buy or equivalent rating.
Shares of J.M. Smucker closed down 0.33 percent year-to-date (YTD) at Monday levels and up more than 4 percent in the past 52 weeks. The company has a market cap close to $8.6 billion and price-to-earnings ratio near 19.35 at current levels.
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