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Bull of the Day: J.M. Smucker (SJM)

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Headquartered in Orrville, OH, the J.M. Smucker Company (SJM - Free Report) is a consumer staples giant, manufacturing food, beverage, and pet food and snacks products in North America. Its brand portfolio includes well-known names like Folgers, Jif, Pillsbury, Hungry Jack, Meow Mix, Milk-Bone, and of course, Smucker’s.

Forecasting Better-Than-Expected 2019 Results

Like many consumer staples companies, Smucker is seeing a dramatic increase in sales as Americans continue to stock up their pantries during the coronavirus pandemic.

In a recent news release, the company said that it now only expects to see a 1% net sales decline versus its original guidance of a 3% decrease. Smucker’s capital expenditures should also be lower than the $300 million to $320 million it had initially projected.

Adjusted EPS is expected to be higher than the original range of $8.10 to $8.30 per share, while free cash flow should exceed the projected $850 million.

The company also said it is working on strengthening and expanding its supply chain in order to meet the current high demand.

As for precautionary measures, Smucker is now using temperature scanning on its workforce and implementing extra cleaning measures at its distribution facilities.

Looking ahead, SJM said it is withdrawing its fiscal 2021 guidance due to broad uncertainty and the unknown impact the outbreak may have on operations.

Earnings & Dividend Growth


The J. M. Smucker Company Price and Consensus


Shares of SJM have gained more than 15% compared to the S&P 500’s drop of roughly 11% so far this year. Earnings estimates have been rising, and Smucker is a Zacks Rank #1 (Strong Buy) right now.

For the current fiscal year, six analysts have revised their bottom line estimate upwards in the last 60 days, and the Zacks Consensus Estimate has moved up 24 cents to $8.42 per share; earnings are expected to increase 1.6% compared to the prior year period. 2021 looks strong as well, with earnings expected to see 1.3% year-over-year growth.

SJM also offers potential investors value. It only trades at a 14X forward multiple, below its peers (21X) and the broader market (18X).

And, SJM boasts a 3% dividend yield. With a payout ratio of only 42%, SJM has room to continue to expand its dividend.

If you’re an investor searching for a consumer staples stock to add to your portfolio, make sure to keep SJM on your shortlist.

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