J. M. Smucker Company Faces Market Challenges Despite Strong Q3 Performance
The J. M. Smucker Company (SJM), established in 1897 and based in Orrville, Ohio, is a notable player in the food and beverage sector. With a market cap of $12.1 billion, Smucker is known for its reliable brands and innovative product solutions. The company’s diverse offerings include spreads, coffee, pet food, and snacks, underscoring a commitment to quality and sustainability that appeals to consumers globally.
Stock Performance Dips Below Market Average
This well-known consumer packaged goods firm has struggled compared to the overall market during the past year. While SJM shares have increased by 6%, the S&P 500 Index ($SPX) has seen a remarkable< u>nearly 32.1% surge. So far in 2024, SJM stock is down 5% year-to-date, whereas the SPX is up 26.2%.
Competitive Pressures and Mixed Earnings
Focusing further, SJM has also lagged behind the First Trust Nasdaq Food & Beverage ETF (FTXG), which has risen by 1.2% this year.
J.M. Smucker’s struggles this year have been mainly due to stiff competition in its coffee segment, changing consumer habits, as well as supply chain issues and increasing production costs. However, the company’s Q3 earnings results, released on November 26, resulted in a 5.7% share price increase, reflecting solid financial performance.
Year-over-year revenue increased by 17.2% to $2.27 billion, in line with estimates. In addition, adjusted earnings per share (EPS) were reported at $2.76, surpassing expectations by 10.2%. Adjusted EBITDA was $554.3 million, exceeding projections by 5.5% and yielding a margin of 24.4%.
Management also raised the full-year adjusted EPS guidance to $9.90 at the midpoint, a 1% increase. Although the operating margin fell to 7.5% from 15.4% compared to the previous year, free cash flow margin saw a noteworthy improvement to 14%, indicating stronger cash generation.
For the current fiscal year ending in April 2025, analysts forecast a modest 1.5% decline in EPS to $9.79 on a diluted basis. Smucker has a history of exceeding earnings expectations, registering surprises above consensus estimates for the past four quarters.
Among the 14 analysts tracking SJM stock, the consensus rating is a “Moderate Buy,” consisting of four “Strong Buy” ratings, nine “Holds,” and one “Strong Sell.”
This outlook appears less optimistic than a month prior, when five analysts suggested a “Strong Buy.”
On November 21, TD Cowen analyst Robert Moskow maintained a “Buy” rating on SJM stock with a target price set at $132, indicating a potential upside of 9.9% based on current valuations.
The average price target stands at $124.14, suggesting a premium of 3.4% over SJM’s current pricing. Meanwhile, a Street-high target of $135 indicates an upside potential of 12.4%.
On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more details, please view the Barchart Disclosure Policy here. More news from Barchart
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