We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will J.M. Smucker's (SJM) Dual Plans Enrich Its Portfolio?
Read MoreHide Full Article
In a market where pet nutrition is rapidly picking pace, The J. M. Smucker Company (SJM - Free Report) has struck the right chord with its latest move to acquire Ainsworth Pet Nutrition, LLC. Additionally, the company revealed intentions to explore prudent choices for its U.S. baking category, which includes the possibility of a divestiture. Let’s take a closer look at these announcements and see what it means for the company.
Ainsworth Acquisition
Per the terms of the deal, Smucker will acquire pet foods provider Ainsworth from L Catterton, a renowned private equity company, in a transaction worth approximately $1.9 billion. The amount includes estimated tax benefit of approximately $200 million. The company projects annual synergies of close to $55 million during the first three years. Also, post completion of the deal, the new business will add about $800 million in the first year. Subject to certain conditions, the transaction is expected to close during the fiscal year beginning on May 1, 2018.
Pet Food Gaining Traction
The pet food category has lately delivered growth, courtesy of consumers’ becoming increasingly conscious about the health and wellness of their pets. In fact, the pet food and snacks category generate sales of more than $30 billion annually and counts amongst the fastest growing segments in the nation’s food and beverages market. The company’s effort to tap into this fast-growing arena, with the Ainsworth buyout, is expected to bolster its pet business. Additionally, the buyout will add the well-known Rachael Ray Nutrish brand to Smucker’s pet food portfolio. Incidentally, the Rachael Ray brand accounts for close to two-thirds of Ainsworth's sales. Apart from Smucker, General Mills Inc. (GIS - Free Report) has been striving to expand in this category and entered into an agreement to acquire Blue Buffalo Pet Products, Inc. (BUFF - Free Report) in February.
Well, this is not the first time that J.M. Smucker has undertaken strategic efforts to strengthen its footing in pet foods. In 2015, it acquired Big Heart Pet Brand that added iconic brands such as Meow Mix and Kibbles 'n Bits. The buyout has been bolstering the company’s pet food business. Incidentally, net sales in the company’s U.S. Retail Pet Foods category inched up 2% during the third quarter of fiscal 2018, owing to improved volume/mix. These were primarily related to the Nature's Recipe brand and the company’s pet snacks portfolio. With the inclusion of Ainsworth, we expect Smucker to expand further in this category.
Review of Baking Business
J.M. Smucker is also reviewing strategic options for its U.S. baking business, including a possible divestiture. The review process is expected to be completed by the end of the first quarter of fiscal 2019. The company’s baking business encompasses renowned brands such as Pillsbury and Hungry Jack amongst others. The business, which falls under the U.S. Retail Consumer Foods segment, is expected to generate sales of approximately $370 million for the fiscal year ended in April, 2018. The review process forms part of the company’s restructuring efforts to focus more upon its pet products, coffee, snacks and other food items.
Wrapping it Up
Well, the food industry has been grappling with stiff competition and shifting consumer preferences. Despite these headwinds, industry players like J.M. Smucker and United Natural Foods (UNFI - Free Report) are resorting to strategic tie-ups and other growth initiatives to thrive and sustain. J.M. Smucker actively pursues strategic acquisitions both in the United States as well as overseas. Further, the growing popularity of certain brands has encouraged the company to undertake innovations. Moreover, cost-saving initiatives have enabled the company in undertaking investments.
Indeed, such dedicated endeavors are likely to keep this Zacks Rank #2 (Buy) company as investors’ favorite. Markedly, the stock has advanced 18.7% in the past six months, versus the industry’s decline of 5.6%.
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
Image: Bigstock
Will J.M. Smucker's (SJM) Dual Plans Enrich Its Portfolio?
In a market where pet nutrition is rapidly picking pace, The J. M. Smucker Company (SJM - Free Report) has struck the right chord with its latest move to acquire Ainsworth Pet Nutrition, LLC. Additionally, the company revealed intentions to explore prudent choices for its U.S. baking category, which includes the possibility of a divestiture. Let’s take a closer look at these announcements and see what it means for the company.
Ainsworth Acquisition
Per the terms of the deal, Smucker will acquire pet foods provider Ainsworth from L Catterton, a renowned private equity company, in a transaction worth approximately $1.9 billion. The amount includes estimated tax benefit of approximately $200 million. The company projects annual synergies of close to $55 million during the first three years. Also, post completion of the deal, the new business will add about $800 million in the first year. Subject to certain conditions, the transaction is expected to close during the fiscal year beginning on May 1, 2018.
Pet Food Gaining Traction
The pet food category has lately delivered growth, courtesy of consumers’ becoming increasingly conscious about the health and wellness of their pets. In fact, the pet food and snacks category generate sales of more than $30 billion annually and counts amongst the fastest growing segments in the nation’s food and beverages market. The company’s effort to tap into this fast-growing arena, with the Ainsworth buyout, is expected to bolster its pet business. Additionally, the buyout will add the well-known Rachael Ray Nutrish brand to Smucker’s pet food portfolio. Incidentally, the Rachael Ray brand accounts for close to two-thirds of Ainsworth's sales. Apart from Smucker, General Mills Inc. (GIS - Free Report) has been striving to expand in this category and entered into an agreement to acquire Blue Buffalo Pet Products, Inc. (BUFF - Free Report) in February.
Well, this is not the first time that J.M. Smucker has undertaken strategic efforts to strengthen its footing in pet foods. In 2015, it acquired Big Heart Pet Brand that added iconic brands such as Meow Mix and Kibbles 'n Bits. The buyout has been bolstering the company’s pet food business. Incidentally, net sales in the company’s U.S. Retail Pet Foods category inched up 2% during the third quarter of fiscal 2018, owing to improved volume/mix. These were primarily related to the Nature's Recipe brand and the company’s pet snacks portfolio. With the inclusion of Ainsworth, we expect Smucker to expand further in this category.
Review of Baking Business
J.M. Smucker is also reviewing strategic options for its U.S. baking business, including a possible divestiture. The review process is expected to be completed by the end of the first quarter of fiscal 2019. The company’s baking business encompasses renowned brands such as Pillsbury and Hungry Jack amongst others. The business, which falls under the U.S. Retail Consumer Foods segment, is expected to generate sales of approximately $370 million for the fiscal year ended in April, 2018. The review process forms part of the company’s restructuring efforts to focus more upon its pet products, coffee, snacks and other food items.
Wrapping it Up
Well, the food industry has been grappling with stiff competition and shifting consumer preferences. Despite these headwinds, industry players like J.M. Smucker and United Natural Foods (UNFI - Free Report) are resorting to strategic tie-ups and other growth initiatives to thrive and sustain. J.M. Smucker actively pursues strategic acquisitions both in the United States as well as overseas. Further, the growing popularity of certain brands has encouraged the company to undertake innovations. Moreover, cost-saving initiatives have enabled the company in undertaking investments.
Indeed, such dedicated endeavors are likely to keep this Zacks Rank #2 (Buy) company as investors’ favorite. Markedly, the stock has advanced 18.7% in the past six months, versus the industry’s decline of 5.6%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>