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The J.M. Smucker's (SJM) Solid Pricing Aids Amid Cost Woes
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The J. M. Smucker Company (SJM - Free Report) is focused on efficient pricing, which has been working well for the company amid cost inflation. A focus on core priorities, especially prudent acquisitions, has also been a driving factor. These upsides drove the company in the first quarter of fiscal 2024.
Sustained business momentum encouraged management to raise its adjusted earnings per share (EPS) guidance for fiscal 2024 in its earnings release. The Zacks Consensus Estimate for the current fiscal-year EPS has increased from $9.68 to $9.71 in the past seven days.
Impressive Comparable Sales & Raised View
In the first quarter of fiscal 2024, the company benefited from volume increases in all segments, along with solid brand momentum and consumer loyalty. Excluding noncomparable sales from divestitures and currency movements, net sales surged 21%. The uptick in comparable net sales can be attributed to the higher volume/mix (mainly due to Jif peanut butter) and improved net price realization.
The J. M. Smucker remains on track to support its core growth platforms, including coffee, snacking and pet. In fiscal 2024, the company anticipates comparable net sales to rise 8.5-9.5% on elevated net pricing as well as a favorable volume/mix. The adjusted EPS for fiscal 2024 is now envisioned in the $9.45-$9.85 band, up from the $9.20-$9.60 band expected earlier.
Image Source: Zacks Investment Research
Key Drivers
The J. M. Smucker has been benefiting from positive net price realization, which was also witnessed in the first quarter of fiscal 2024, with higher net price realization contributing eight percentage points to comparable net sales growth. In the U.S. Retail Pet Foods segment, net price realization had a favorable 10-percentage point impact on net sales.
Moreover, the net price realization had a 22% positive impact on sales in the U.S. Retail Consumer Foods. In the International and Away From Home unit, net price realization had a positive impact of 8% on net sales. In the U.S. Retail Coffee, net price realization remained neutral.
The J. M. Smucker is progressing well with core priorities, which include driving commercial excellence, reshaping the portfolio, streamlining the cost structure and unleashing its organization to win. Strength in such strategies is helping The J. M. Smucker navigate cost-related challenges. These are also helping the company improve in-store fundamentals and stock performance for the brands.
SJM is committed to increasing its focus and resources to reshape the portfolio to achieve sustainable growth across pet food and pet snacks, coffee and snacking categories. SJM concluded the divestiture of certain pet food brands in the fourth quarter of fiscal 2023 to reshape the portfolio. This brings the pet business structure to include 60% pet snacks and 40% cat food. This move, which will help the company direct more resources toward the fast-growing and higher-margin dog snacks category, is expected to enhance the product mix and profit over time.
Also, The J. M. Smucker actively pursues strategic acquisitions in the United States as well as overseas. It recently inked a deal to acquire the premier snacking company, Hostess Brands. The transaction is likely to close in the third quarter of fiscal 2024. Other noteworthy acquisitions of the company include Ainsworth, Big Heart Pet Brand, Sahale Snacks, Enray Inc., and coffee brands and business operations of Rowland Coffee, among others.
Additionally, SJM has formed key partnerships with quite a few coffee companies, which is strengthening its coffee business. In this regard, The J. M. Smucker’s alliance with JDE Peet’s is noteworthy. Further, Smucker’s agreement with Keurig Green Mountain and Dunkin’ Brands Group, Inc. to manufacture and sell the K-Cup category of products has been yielding positive results since fiscal 2016.
Cost Woes to be Offset?
The J. M. Smucker has been dealing with rising costs. In its first-quarter earnings release, management stated that ongoing cost inflation, supply-chain bottlenecks and the broader macroeconomic landscape continue to affect the company’s results and cause risks for fiscal 2024.
Management’s bottom-line view for fiscal 2024 assumes elevated selling, distribution and administrative (SD&A) expenses. This includes pre-production costs associated with Uncrustables capacity expansion, elevated marketing expenditures and increased investments in liquid coffee. The company’s shares have tumbled 15% in the past three months compared with the industry’s decline of 9.4%.
However, a focus on core areas and gains from brand strength are likely to aid this Zacks Rank #3 (Hold) company.
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Helen of Troy (HELE - Free Report) , a provider of several consumer products, currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.
e.l.f. Beauty (ELF - Free Report) , a cosmetic and skin care product company, currently carries a Zacks Rank #2. ELF has a trailing four-quarter earnings surprise of 108.3%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales suggests growth of 64.6% from the corresponding year-ago reported figure.
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The J.M. Smucker's (SJM) Solid Pricing Aids Amid Cost Woes
The J. M. Smucker Company (SJM - Free Report) is focused on efficient pricing, which has been working well for the company amid cost inflation. A focus on core priorities, especially prudent acquisitions, has also been a driving factor. These upsides drove the company in the first quarter of fiscal 2024.
Sustained business momentum encouraged management to raise its adjusted earnings per share (EPS) guidance for fiscal 2024 in its earnings release. The Zacks Consensus Estimate for the current fiscal-year EPS has increased from $9.68 to $9.71 in the past seven days.
Impressive Comparable Sales & Raised View
In the first quarter of fiscal 2024, the company benefited from volume increases in all segments, along with solid brand momentum and consumer loyalty. Excluding noncomparable sales from divestitures and currency movements, net sales surged 21%. The uptick in comparable net sales can be attributed to the higher volume/mix (mainly due to Jif peanut butter) and improved net price realization.
The J. M. Smucker remains on track to support its core growth platforms, including coffee, snacking and pet. In fiscal 2024, the company anticipates comparable net sales to rise 8.5-9.5% on elevated net pricing as well as a favorable volume/mix. The adjusted EPS for fiscal 2024 is now envisioned in the $9.45-$9.85 band, up from the $9.20-$9.60 band expected earlier.
Image Source: Zacks Investment Research
Key Drivers
The J. M. Smucker has been benefiting from positive net price realization, which was also witnessed in the first quarter of fiscal 2024, with higher net price realization contributing eight percentage points to comparable net sales growth. In the U.S. Retail Pet Foods segment, net price realization had a favorable 10-percentage point impact on net sales.
Moreover, the net price realization had a 22% positive impact on sales in the U.S. Retail Consumer Foods. In the International and Away From Home unit, net price realization had a positive impact of 8% on net sales. In the U.S. Retail Coffee, net price realization remained neutral.
The J. M. Smucker is progressing well with core priorities, which include driving commercial excellence, reshaping the portfolio, streamlining the cost structure and unleashing its organization to win. Strength in such strategies is helping The J. M. Smucker navigate cost-related challenges. These are also helping the company improve in-store fundamentals and stock performance for the brands.
SJM is committed to increasing its focus and resources to reshape the portfolio to achieve sustainable growth across pet food and pet snacks, coffee and snacking categories. SJM concluded the divestiture of certain pet food brands in the fourth quarter of fiscal 2023 to reshape the portfolio. This brings the pet business structure to include 60% pet snacks and 40% cat food. This move, which will help the company direct more resources toward the fast-growing and higher-margin dog snacks category, is expected to enhance the product mix and profit over time.
Also, The J. M. Smucker actively pursues strategic acquisitions in the United States as well as overseas. It recently inked a deal to acquire the premier snacking company, Hostess Brands. The transaction is likely to close in the third quarter of fiscal 2024. Other noteworthy acquisitions of the company include Ainsworth, Big Heart Pet Brand, Sahale Snacks, Enray Inc., and coffee brands and business operations of Rowland Coffee, among others.
Additionally, SJM has formed key partnerships with quite a few coffee companies, which is strengthening its coffee business. In this regard, The J. M. Smucker’s alliance with JDE Peet’s is noteworthy. Further, Smucker’s agreement with Keurig Green Mountain and Dunkin’ Brands Group, Inc. to manufacture and sell the K-Cup category of products has been yielding positive results since fiscal 2016.
Cost Woes to be Offset?
The J. M. Smucker has been dealing with rising costs. In its first-quarter earnings release, management stated that ongoing cost inflation, supply-chain bottlenecks and the broader macroeconomic landscape continue to affect the company’s results and cause risks for fiscal 2024.
Management’s bottom-line view for fiscal 2024 assumes elevated selling, distribution and administrative (SD&A) expenses. This includes pre-production costs associated with Uncrustables capacity expansion, elevated marketing expenditures and increased investments in liquid coffee. The company’s shares have tumbled 15% in the past three months compared with the industry’s decline of 9.4%.
However, a focus on core areas and gains from brand strength are likely to aid this Zacks Rank #3 (Hold) company.
Key Picks
Inter Parfums (IPAR - Free Report) , which manufactures, markets and distributes a range of fragrances and fragrance-related products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
The Zacks Consensus Estimate for Inter Parfums’ current financial-year sales indicates 19.7% growth from the year-ago reported figure. IPAR has a trailing four-quarter earnings surprise of 45.9%, on average.
Helen of Troy (HELE - Free Report) , a provider of several consumer products, currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Helen of Troy’s current fiscal-year sales suggests a decline of 2.9% from the year-ago reported numbers. HELE has a trailing four-quarter earnings surprise of 8.1%, on average.
e.l.f. Beauty (ELF - Free Report) , a cosmetic and skin care product company, currently carries a Zacks Rank #2. ELF has a trailing four-quarter earnings surprise of 108.3%, on average.
The Zacks Consensus Estimate for e.l.f. Beauty’s current fiscal-year sales suggests growth of 64.6% from the corresponding year-ago reported figure.