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Category: Stock Market and J.M Smucker's
Date: 23 November 2019 Stock Price: $108.40 We take a look at the 2nd quarter 2020 earnings report of jams, snacks, mayonnaise and pet food maker, J.M Smucker's. Has the company's stock valuation price increased from our last valuation for the group? Read on below to find out.
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About J.M Smucker's
The J.M. Smucker Company is an iconic American company founded in 1897. Guided by a vision to engage, delight, and inspire consumers through trusted food and beverage brands that bring joy throughout their lives, Smucker has grown to be a well-respected North American marketer and manufacturer. Our balanced portfolio of leading and emerging, on-trend brands spans pet food and pet snacks, coffee, and consumer food and natural beverage.
For more than 120 years, our Company has remained under the constant leadership of our founding family – the Smucker’s. We are proud to have fostered success through five generations of family leadership by focusing on long-term growth and embracing a foundation of strong principles and clear communication.
Today, the Company remains rooted in our Basic Beliefs of Quality, People, Ethics, Growth, and Independence established by our founder and namesake, Jerome Monroe (J.M.) Smucker, more than a century ago. We strongly believe that our unique culture is foundational to our Company’s success and the sustained passion of our employees. When we talk about our culture, we are referring to an environment that engages our employees, inspires passion for our brands, and makes people proud to work here — an atmosphere where everyone makes a difference.
Some of the group's brands include:
For more than 120 years, our Company has remained under the constant leadership of our founding family – the Smucker’s. We are proud to have fostered success through five generations of family leadership by focusing on long-term growth and embracing a foundation of strong principles and clear communication.
Today, the Company remains rooted in our Basic Beliefs of Quality, People, Ethics, Growth, and Independence established by our founder and namesake, Jerome Monroe (J.M.) Smucker, more than a century ago. We strongly believe that our unique culture is foundational to our Company’s success and the sustained passion of our employees. When we talk about our culture, we are referring to an environment that engages our employees, inspires passion for our brands, and makes people proud to work here — an atmosphere where everyone makes a difference.
Some of the group's brands include:
- Crosse & Blackwell
- Adams
- Knotts
- Tru Roots Organic
- Santa Cruz Organic
- Sahale Snacks
Overview of JM Smucker's 2nd quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Net sales: $1.957 billion (down from $2.021 billion from the same quarter of the previous year)
- Net sales decreased by 3% over the last 12 months
- Cost of products sold: $1.203 billion (down from $1.250 billion for the same quarter of the previous year)
- Cost of products dol decreased by 4% over the last 12 months
- Net income: $211.2 million (up 12% from $188.5 million loss for the same quarter of the previous year)
- Diluted earnings per share: $1.85 (up 11% from $1.66 for the same quarter of the previous year)
- PE ratio of J.M Smuckers: 14.5
- PE ratio of J.M Smuckers: 14.5
- Dividend declared: $0.88 (up 4% from 0.85 for the same quarter of the previous year)
- Dividend yield of J.M Smuckers: 3.2%
- Dividend yield of J.M Smuckers: 3.2%
- Diluted weighted-average shares outstanding: 114.1 million (up from 113.7 million for the same quarter of the previous year)
- Cash and cash equivalents: $48.8 million
- Cash and cash equivalents per share: $0.43
- Cash and cash equivalents makes up 0.39% of J.M Smucker's market capital
- Cash and cash equivalents makes up 0.29% of J.M Smucker's total assets
- Receivables: $522.4million
- Receivables makes up 3.11% of J.M Smucker's total assets
- Inventories: $1.013 billion
- Inventories makes up 6.6% of J.M Smucker's total assets
- Stockholders equity in J.M Smuckers: $8.095 billion
- Stockholders equity per share in J.M Smucker: $70.95
- J.M Smucker's is trading at 1.52 times its stockholders equity which is outside the expected range of between 2 and 4 times that most firms tend to trade at
- Stockholders equity per share in J.M Smucker: $70.95
- Cash generated from operations for 9 months: $224 million
- Cash generated from operations per share for 9 months: $1.96
J.M Smuckers management commentary on their 2nd quarter 2020 earnings report
ORRVILLE, Ohio, Nov. 22, 2019 /PRNewswire/ -- The J. M. Smucker Company (NYSE: SJM) today announced results for the second quarter ended October 31, 2019, of its 2020 fiscal year. Financial results reflect the divestiture of the Company's U.S. baking business on August 31, 2018.
"While our second quarter sales performance did not meet our expectations, we delivered EPS growth ahead of our projection, reflecting our commitment to maintain financial discipline and strengthen our bottom line," said Mark Smucker, President and Chief Executive Officer.
"Despite continuing softness for our premium dog food offerings, we were pleased with the performance for the balance of our portfolio, as the momentum for our cat food and pet snacks businesses continued with year over year sales increases, our high growth coffee brands improved household penetration and market share, and Smucker's® Uncrustables® grew 19 percent, helping accelerate growth in snacking. Looking ahead, the actions we are taking across the Company, including the recently announced leadership changes, position us well for future long-term growth and shareholder value creation."
"While our second quarter sales performance did not meet our expectations, we delivered EPS growth ahead of our projection, reflecting our commitment to maintain financial discipline and strengthen our bottom line," said Mark Smucker, President and Chief Executive Officer.
"Despite continuing softness for our premium dog food offerings, we were pleased with the performance for the balance of our portfolio, as the momentum for our cat food and pet snacks businesses continued with year over year sales increases, our high growth coffee brands improved household penetration and market share, and Smucker's® Uncrustables® grew 19 percent, helping accelerate growth in snacking. Looking ahead, the actions we are taking across the Company, including the recently announced leadership changes, position us well for future long-term growth and shareholder value creation."
Net sales are expected to be down 3 percent compared to the prior year, which included the loss of $105.9 million of sales in the first 4 months of fiscal 2019 related to the divested U.S. baking business and $25.4 million of incremental noncomparable sales for Ainsworth Pet Nutrition, LLC ("Ainsworth"). On a comparable basis, net sales are expected to be down 2 percent. The revision versus previous guidance includes the impact of second quarter sales results and greater than anticipated softness in the back half of the fiscal year, primarily for certain brands within the U.S. Retail Pet Foods segment.
Adjusted earnings per share is expected to range from $8.10 to $8.30, based on 114.0 million shares outstanding. Earnings guidance reflects the reduced contribution from sales, gross profit margin of approximately 38.5 percent, and SD&A expenses declining approximately 2 percent compared to the prior year. Free cash flow is expected to be approximately $850 million.
The image below shows the fiscal guidance of J.M Smucker
Adjusted earnings per share is expected to range from $8.10 to $8.30, based on 114.0 million shares outstanding. Earnings guidance reflects the reduced contribution from sales, gross profit margin of approximately 38.5 percent, and SD&A expenses declining approximately 2 percent compared to the prior year. Free cash flow is expected to be approximately $850 million.
The image below shows the fiscal guidance of J.M Smucker
J.M Smucker's company (NYSE: SJM) stock price history
The image below, obtained from Google shows the stock price history for J.M Smucker for the last 5 years. It has been a fairly up and down ride for the group's shareholders with the stock having periods of significant price increases and declines. 5 years ago the stock was trading at about $103 a share and its currently trading at $108.40 a stock. So that's a relatively weak return of 5.2% provided to J.M Smucker stockholders over the last 5 years.
The stock of J. M Smucker is trading at close to the midpoint between its 52 week high and its 52 week low, which to us is an indication that the short term sentiment and momentum of J.M Smucker's stock is neutral. And this is reflected in the fact that the stock has been trading sideways for a while.
The stock of J. M Smucker is trading at close to the midpoint between its 52 week high and its 52 week low, which to us is an indication that the short term sentiment and momentum of J.M Smucker's stock is neutral. And this is reflected in the fact that the stock has been trading sideways for a while.
Recent coverage of J.M Smucker
The extract below covers the latest earnings report from J. M Smucker as obtained from TheStreet.com
J.M. Smucker Co.'s (SJM - Get Report) stock on Friday made some sweet gains after the foods producer beat second-quarter earnings estimates. Smucker's shares climbed 3.6% to $107.85 after the maker of everything from Uncrustables and Jif peanut butter to dog and cat food reported GAAP profit of $1.85 a share versus $1.66 in the year-earlier quarter.
For the quarter ended Oct. 31, adjusted earnings were $2.26 a share, stronger than analysts expected and up 4% from $2.17 a year earlier. The gains followed a premarket downturn in the shares. Investors had been concerned that Smucker's executives had cut their guidance on earnings and sales for fiscal 2020. Smucker's said it expected sales to fall 2% in fiscal 2020, compared to its previous estimate that sales would at least be even with the year earlier and could rise as much as 1%.
Read the full article here
J.M. Smucker Co.'s (SJM - Get Report) stock on Friday made some sweet gains after the foods producer beat second-quarter earnings estimates. Smucker's shares climbed 3.6% to $107.85 after the maker of everything from Uncrustables and Jif peanut butter to dog and cat food reported GAAP profit of $1.85 a share versus $1.66 in the year-earlier quarter.
For the quarter ended Oct. 31, adjusted earnings were $2.26 a share, stronger than analysts expected and up 4% from $2.17 a year earlier. The gains followed a premarket downturn in the shares. Investors had been concerned that Smucker's executives had cut their guidance on earnings and sales for fiscal 2020. Smucker's said it expected sales to fall 2% in fiscal 2020, compared to its previous estimate that sales would at least be even with the year earlier and could rise as much as 1%.
Read the full article here
J.M Smucker's (NYSE: SJM) stock valuation
So what do we value J.M Smuckers stock at following the release of their 2nd quarter 2020 earnings report? Based on their 2nd quarter 2020 earnings report and the guidance provided for the rest of the 2020 fiscal year our valuation model provides a target (full value) price for J.M Smucker's at $129.60 a stock (up slightly from our 1st quarter 2020 earnings report valuation of J.M Smuckers) . We therefore believe the stock of J.M Smucker's is undervalued
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $129.60 A good entry point into the stock of J.M Smuckers would therefore be at $116.70 or below. Since the stock of J.M Smucker's is trading at well below our target and suggested entry price we rate the stock of J.M Smucker as a buy
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price which in this case is $129.60 A good entry point into the stock of J.M Smuckers would therefore be at $116.70 or below. Since the stock of J.M Smucker's is trading at well below our target and suggested entry price we rate the stock of J.M Smucker as a buy
Next earnings release for J.M Smucker
It is expected that J.M Smucker will release their 3rd quarter 2020 earnings towards the end of February 2020