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The J. M. Smucker (SJM) Up on Core Strategies & Pricing Efforts
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The J. M. Smucker Company (SJM - Free Report) is benefiting from its focus on core priorities. Strength in the Away from Home division and coffee business is fueling growth. The company is undertaking strategic pricing efforts amid a rising inflationary environment.
Let’s delve deeper.
Focus on Core Strategies
The J. M. Smucker is progressing well with core priorities, which include driving commercial excellence, reshaping its portfolio, streamlining cost structure and unleashing its organization to win. Strength in such strategies is helping the company navigate complex supply chain challenges. These are also helping the company improve in-store fundamentals and stock performance for the brands. The company is implementing inflation-justified pricing actions across all businesses. The company is committed to increasing its focus and resources to reshape its portfolio and achieve sustainable growth across pet food and snacks, coffee and snacking categories. Management has been optimizing its supply chain, lowering discretionary costs and expanding network production efficiencies to streamline costs.
Image Source: Zacks Investment Research
What Else is Driving Growth?
The J. M. Smucker Company is benefiting from strength in the International and Away from Home divisions. This was witnessed in second-quarter fiscal 2023, with net sales advancing 14% to $297.9 million. Excluding divestitures and currency headwinds, net sales rose 19% for the Away from Home division, driven by double-digit growth for coffee and Uncrustables sandwiches. The segment’s profit climbed 3% to $41.5 million, mainly reflecting a favorable net impact of positive net price realization and higher commodity costs somewhat offset by lower contribution from volume/mix.
Talking of the coffee business, the overall coffee portfolio looks encouraging as at-home coffee remains strong, despite inflationary pressures given consumers’ daily coffee habits. In the coffee category, net sales grew 10%, led by all brands in the market-leading at-home coffee portfolio during the second quarter of fiscal 2023. The company’s Café Bustelo and Folgers brands are doing well in the category.
Will Cost Hurdles be Countered?
During second-quarter fiscal 2023, The J. M. Smucker’s gross profit dipped 1%. The lower gross profit was a result of higher commodity and ingredient, packaging, transportation and manufacturing costs, among other factors partly compensated by improved net price realization. The adjusted operating income fell 2% due to the reduced gross profit and higher selling, distribution and administrative (SD&A) costs.
On its quarterly earnings release, management stated that the ongoing cost inflation, a volatile supply chain and a broader macroeconomic landscape continue to affect the company’s results and cause risks for fiscal 2023.
Nevertheless, The J.M. Smucker remains focused on pricing actions to minimize the impacts of cost inflation. We note that the company is benefiting from positive net price realization, which was witnessed in the second quarter of fiscal 2023, with higher net price realization contributing 17 percentage points to the top-line growth. During the quarter, net sales growth was mainly backed by positive net price realization in the company segments.
Shares of this Zacks Rank #3 (Hold) company have rallied 23.7% in the past six months compared to the industry’s growth of 7.8%.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.8% and 3.8%, respectively, from the corresponding year-ago reported figures.
Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank of 2. CPB has a trailing four-quarter earnings surprise of 8.7%, on average.
The Zacks Consensus Estimate for Campbell Soup’s current financial-year sales and earnings suggests growth of 8.2% and 4.9%, respectively, from the corresponding year-ago reported figures.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2. MDLZ has a trailing four-quarter earnings surprise of 6.4%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 8.8% and 2.4%, respectively, from the corresponding year-ago reported figures.
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The J. M. Smucker (SJM) Up on Core Strategies & Pricing Efforts
The J. M. Smucker Company (SJM - Free Report) is benefiting from its focus on core priorities. Strength in the Away from Home division and coffee business is fueling growth. The company is undertaking strategic pricing efforts amid a rising inflationary environment.
Let’s delve deeper.
Focus on Core Strategies
The J. M. Smucker is progressing well with core priorities, which include driving commercial excellence, reshaping its portfolio, streamlining cost structure and unleashing its organization to win. Strength in such strategies is helping the company navigate complex supply chain challenges. These are also helping the company improve in-store fundamentals and stock performance for the brands. The company is implementing inflation-justified pricing actions across all businesses. The company is committed to increasing its focus and resources to reshape its portfolio and achieve sustainable growth across pet food and snacks, coffee and snacking categories. Management has been optimizing its supply chain, lowering discretionary costs and expanding network production efficiencies to streamline costs.
Image Source: Zacks Investment Research
What Else is Driving Growth?
The J. M. Smucker Company is benefiting from strength in the International and Away from Home divisions. This was witnessed in second-quarter fiscal 2023, with net sales advancing 14% to $297.9 million. Excluding divestitures and currency headwinds, net sales rose 19% for the Away from Home division, driven by double-digit growth for coffee and Uncrustables sandwiches. The segment’s profit climbed 3% to $41.5 million, mainly reflecting a favorable net impact of positive net price realization and higher commodity costs somewhat offset by lower contribution from volume/mix.
Talking of the coffee business, the overall coffee portfolio looks encouraging as at-home coffee remains strong, despite inflationary pressures given consumers’ daily coffee habits. In the coffee category, net sales grew 10%, led by all brands in the market-leading at-home coffee portfolio during the second quarter of fiscal 2023. The company’s Café Bustelo and Folgers brands are doing well in the category.
Will Cost Hurdles be Countered?
During second-quarter fiscal 2023, The J. M. Smucker’s gross profit dipped 1%. The lower gross profit was a result of higher commodity and ingredient, packaging, transportation and manufacturing costs, among other factors partly compensated by improved net price realization. The adjusted operating income fell 2% due to the reduced gross profit and higher selling, distribution and administrative (SD&A) costs.
On its quarterly earnings release, management stated that the ongoing cost inflation, a volatile supply chain and a broader macroeconomic landscape continue to affect the company’s results and cause risks for fiscal 2023.
Nevertheless, The J.M. Smucker remains focused on pricing actions to minimize the impacts of cost inflation. We note that the company is benefiting from positive net price realization, which was witnessed in the second quarter of fiscal 2023, with higher net price realization contributing 17 percentage points to the top-line growth. During the quarter, net sales growth was mainly backed by positive net price realization in the company segments.
Shares of this Zacks Rank #3 (Hold) company have rallied 23.7% in the past six months compared to the industry’s growth of 7.8%.
3 Solid Food Picks
Some better-ranked stocks are Conagra Brands (CAG - Free Report) , Campbell Soup (CPB - Free Report) and Mondelez International, Inc. (MDLZ - Free Report) .
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank of 2 (Buy). CAG has a trailing four-quarter earnings surprise of 1.8%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Conagra Brands’ current financial year sales and earnings suggests growth of 5.8% and 3.8%, respectively, from the corresponding year-ago reported figures.
Campbell Soup, which manufactures and markets food and beverage products, currently carries a Zacks Rank of 2. CPB has a trailing four-quarter earnings surprise of 8.7%, on average.
The Zacks Consensus Estimate for Campbell Soup’s current financial-year sales and earnings suggests growth of 8.2% and 4.9%, respectively, from the corresponding year-ago reported figures.
Mondelez International, which manufactures, markets, and sells snack food and beverage products, carries a Zacks Rank 2. MDLZ has a trailing four-quarter earnings surprise of 6.4%, on average.
The Zacks Consensus Estimate for Mondelez’s current financial-year sales and earnings suggests growth of 8.8% and 2.4%, respectively, from the corresponding year-ago reported figures.