Back to top

Analyst Blog

Shares of The J.M. Smucker Co. (SJM - Analyst Report) hit a new 52-week high of $101.11 on Apr 12 and eventually closed at $101.10. Shares of this food and beverage company have been gaining momentum since it reported solid fiscal third quarter results on Feb 15. Smucker also slashed its packaged coffee prices on Feb 19, which further boosted the share price.

In fact, the stock has set new 52-week highs thrice i.e. on Feb 27, Mar 8 and Mar 28 since the announcement of its third quarter results.

Year-to-date, share prices have recorded a healthy return of 13.4%. The company’s long-term estimated EPS growth rate is 8.70%. Average volume of shares traded over the last three months came in at approximately 520K.

Solid Third Quarter Performance

Smucker posted strong fiscal third quarter results beating the Zacks Consensus Estimate for both revenues and earnings. The company’s continued focus on its brands through innovations and promotional offerings, strategic acquisitions, improving volumes of K-cups, and effective utilization of cash through buybacks drove earnings.

The company’s earnings of $1.47 per share jumped approximately 20% year over year in the third quarter, primarily driven by increased sales growth and lower share count due to share buybacks. Net sales growth of 6% was driven by favorable sales mix and benefits from the acquisition of Sara Lee Corporation’s North American foodservice coffee and hot beverage business in January last year. Volume gains in the higher priced K-Cups coffee brand and peanut butter business also fueled growth.

In addition, the company managed to offset higher peanut costs in the quarter by acquisition gains, favorable sales mix and lower green coffee costs. This was also reflected in higher gross and operating margins in the third quarter.

Smucker also raised the lower end of its adjusted earnings guidance to a range of $5.17 to $5.22 per share from 5.12 to $5.22 per share announced previously. The company had already increased its fiscal 2013 earnings guidance in the first and second quarters as well, reflecting its attractive earnings potential.

Slashed Coffee Prices

Following its third quarter earnings, Smucker slashed the list prices by an average 6% for its flagship brand Folgers, its licensed brand Dunkin' Donuts and majority of its packaged coffee products sold in the U.S. The company has cut its prices for the third time since year 2011 in response to a decline in green coffee costs.

Other Stocks to Consider

Stocks in the food industry that are portraying strong upward trend in the bourses are Flower Foods Inc (FLO - Snapshot Report), ConAgra Foods Inc (CAG - Analyst Report) and General Mills Inc (GIS - Analyst Report). While Flower Foods carries a Zacks Rank #1 (Strong Buy), ConAgra and General Mills hold a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%