|
Related Topics
|
Category: Stock Market and J.M Smucker's
Date: 16 March 2020 Stock Price: $109.61 We take a look at the 3rd quarter 2020 earnings report of jams, snacks, mayonnaise and pet food maker, J.M Smucker's. The group's stock price has held up extraordinary well in the recent market sell off sparked by the Coronavirus.
|
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 3rd quarter 2020 earnings report
The data below refers to the latest quarter unless specified otherwise:
- Net sales: $1.972 billion (down from $2.011 billion from the same quarter of the previous year)
- Net sales decreased by 2% over the last 12 months
- Cost of products sold: $1.212 billion (down from $1.238 billion for the same quarter of the previous year)
- Cost of products dol decreased by 2% over the last 12 months
- Net income: $187.4 million (up 54% from $121.4 million loss for the same quarter of the previous year)
- Diluted earnings per share: $1.64 (up 53% from $1.07 for the same quarter of the previous year)
- PE ratio of J.M Smuckers: 13.5
- 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%
- Diluted weighted-average shares outstanding: 114.0 million (up from 113.8 million for the same quarter of the previous year)
- Cash and cash equivalents: $74.4 million
- Cash and cash equivalents per share: $0.65
- Cash and cash equivalents makes up 0.59% of J.M Smucker's market capital
- Cash and cash equivalents makes up 0.44% of J.M Smucker's total assets
- Receivables: $477.3 million
- Receivables makes up 2.87% of J.M Smucker's total assets
- Inventories: $959.8 million
- Inventories makes up 5.8% of J.M Smucker's total assets
- Stockholders equity in J.M Smuckers: $8.170 billion
- Stockholders equity per share in J.M Smucker: $71.67
- 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
- The price to book of the S&P 500 is at 3.34. (Click here for more interesting facts regarding the S&P 500)
- Cash generated from operations for the quarter : $521.6 million
- Cash generated from operations per share for the quarter: $4.57
J.M Smuckers management commentary on their 3rd quarter 2020 earnings report
ORRVILLE, Ohio, Feb. 26, 2020 /PRNewswire/ -- The J. M. Smucker Company (NYSE: SJM) today announced results for the third quarter ended January 31, 2020, of its 2020 fiscal year. All comparisons are to the third quarter of the prior fiscal year, unless otherwise noted.
"Third quarter results were in-line with our expectations, benefiting from continued investment in our strategic growth imperatives and the decisive actions we are taking to improve certain areas of the business. Net sales performance reflected strong growth for the Smucker's® Uncrustables® brand and improved volume fundamentals for our coffee and peanut butter brands, which supported market share and household penetration growth in both categories. This helped partially offset the anticipated decline for our dog food business," said Mark Smucker, President and Chief Executive Officer. "Our results in the quarter reinforced our commitment to operate with financial discipline, highlighted by adjusted earnings per share growth of 4 percent, strong free cash flow of $465 million, and net debt repayments exceeding $300 million. As we look forward, we are confident in delivering on our full-year guidance, while positioning the business for consistent long-term growth and shareholder value creation.
"Third quarter results were in-line with our expectations, benefiting from continued investment in our strategic growth imperatives and the decisive actions we are taking to improve certain areas of the business. Net sales performance reflected strong growth for the Smucker's® Uncrustables® brand and improved volume fundamentals for our coffee and peanut butter brands, which supported market share and household penetration growth in both categories. This helped partially offset the anticipated decline for our dog food business," said Mark Smucker, President and Chief Executive Officer. "Our results in the quarter reinforced our commitment to operate with financial discipline, highlighted by adjusted earnings per share growth of 4 percent, strong free cash flow of $465 million, and net debt repayments exceeding $300 million. As we look forward, we are confident in delivering on our full-year guidance, while positioning the business for consistent long-term growth and shareholder value creation.
Cash Flow and Debt
Cash provided by operating activities was $521.6 million, compared to $421.1 million in the prior year, primarily reflecting a decrease in cash required to fund working capital. The decrease in working capital requirements was primarily driven by an increase in accounts payable due to working capital initiatives. Free cash flow was $465.1 million, compared to $333.0 million in the prior year, reflecting the increase in cash provided by operating activities and a $31.6 million reduction in capital expenditures. Net debt repayments in the quarter totaled $319.7 million.
FULL-YEAR OUTLOOK
The Company reaffirmed its full-year fiscal 2020 net sales, adjusted earnings per share, and free cash flow guidance as summarized below:
On a comparable basis, net sales are expected to be down 2 percent. 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 contribution from sales at a gross profit margin of approximately 38.2 percent, SD&A expenses declining approximately 2.5 percent compared to the prior year, and an effective tax rate of 24.0 percent. Free cash flow is expected to be approximately $850 million.
Cash provided by operating activities was $521.6 million, compared to $421.1 million in the prior year, primarily reflecting a decrease in cash required to fund working capital. The decrease in working capital requirements was primarily driven by an increase in accounts payable due to working capital initiatives. Free cash flow was $465.1 million, compared to $333.0 million in the prior year, reflecting the increase in cash provided by operating activities and a $31.6 million reduction in capital expenditures. Net debt repayments in the quarter totaled $319.7 million.
FULL-YEAR OUTLOOK
The Company reaffirmed its full-year fiscal 2020 net sales, adjusted earnings per share, and free cash flow guidance as summarized below:
- Net sales increase (decrease) vs prior year (3)%
- Adjusted earnings per share $8.10 - $8.30
- Free cash flow (in millions) $850
- Capital expenditures (in millions) $300 - $320
- Effective tax rate 24.0%
- Net sales are expected to be down 3 percent compared to the prior year, which includes 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. 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 contribution from sales at a gross profit margin of approximately 38.2 percent, SD&A expenses declining approximately 2.5 percent compared to the prior year, and an effective tax rate of 24.0 percent. Free cash flow is expected to be approximately $850 million.
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 stockholders with the stock having periods of significant price increases and declines. 5 years ago the stock was trading at about $113.70 a share and its currently trading at $109.61 a stock. So that's a small loss of -3.6% suffered by 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 $124.70 a stock (down slightly from our 2nd 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 $124.70.
A good entry point into the stock of J.M Smuckers would therefore be at $112.20 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 $124.70.
A good entry point into the stock of J.M Smuckers would therefore be at $112.20 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 4th quarter 2020 earnings towards the end of May 2020