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Things to Note as J.M. Smucker (SJM) Lines Up for Q4 Earnings

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The J. M. Smucker Company (SJM - Free Report) is likely to register a top and bottom-line decline when it reports fourth-quarter fiscal 2022 earnings on Jun 7. The Zacks Consensus Estimate for quarterly revenues is pegged at $1,981 million, suggesting a decrease of 0.7% from the figure reported in the prior-year quarter.

The Zacks Consensus Estimate for quarterly earnings has dipped by a penny in the past 30 days to $1.88 per share, indicating a 6.4% decline from the figure reported in the prior-year quarter. The manufacturer and marketer of branded food and beverage products has a trailing four-quarter earnings surprise of 11.2%, on average. In the last reported quarter, the company delivered an earnings surprise of nearly 12%.

The J. M. Smucker Company Price, Consensus and EPS Surprise

The J. M. Smucker Company Price, Consensus and EPS Surprise

The J. M. Smucker Company price-consensus-eps-surprise-chart | The J. M. Smucker Company Quote

Things to Consider

The J. M. Smucker is encountering cost inflation and supply-chain and transportation challenges along with isolated labor shortages. On its third-quarter earnings call, management stated that the adjusted gross margin is expected at nearly 35% in fiscal 2022, with the cost inflation expected to have a low double-digit impact on the total cost of products sold. In the fourth quarter, management expects a gross margin decline of roughly 350 basis points, mainly due to inflated green coffee costs.

On its last earnings call, management also stated that supply-chain and transportation challenges, along with isolated labor shortages, continue to restrict the company’s ability to fully cater to demand, especially in the pet food business. SJM anticipates net sales to be down 0.5%-1.5% year over year in fiscal 2022. The net sales view reflects an impact of $431.8 million associated with the Crisco, Natural Balance, private label dry pet food and natural beverage and grains businesses divestiture. Adjusted earnings per share (EPS) for fiscal 2022 are envisioned in the range of $8.35-$8.65. The guidance reflects a timing lag related to the increased net price realization and continued cost inflation. Also, the view includes adjustments to the fourth quarter for recently sold businesses, elevated costs and supply-chain woes.

However, the company is benefiting from the revival of the Away from Home division. On its last earnings call, The J. M. Smucker said that it expects to see continued strength in demand for its products. Management remains encouraged about its overall coffee portfolio as at-home coffee habits created during the pandemic are likely to stay. These are likely to be partly negated by a deceleration in at-home consumption and supply-chain headwinds (which are likely to impact the company’s pet food business). Additionally, a focus on core priorities bodes well. This includes driving commercial excellence, reshaping the portfolio, streamlining the cost structure and unleashing its organization to win.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for The J. M. Smucker this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. However, that is not the case here.

The J. M. Smucker currently carries a Zacks Rank #4 (Sell) and has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With the Favorable Combination

Here are some companies worth considering as our model shows that these have the right combination of elements to beat earnings this season:

Kroger (KR - Free Report) currently has an Earnings ESP of +2.95% and a Zacks Rank #2. The company is expected to register bottom-line growth when it reports first-quarter fiscal 2022 results. The Zacks Consensus Estimate for quarterly EPS of $1.27 suggests an increase of 6.7% from the year-ago quarter’s reported figure. You can see the complete list of today’s Zacks #1 Rank stocks here.

Kroger’s top line is anticipated to rise year over year. The consensus mark for revenues is pegged at $43,220 million, indicating an increase of 4.7% from the year-ago quarter’s levels. KR has a trailing four-quarter earnings surprise of 22.1%, on average.

Casey's General Stores (CASY - Free Report) currently has an Earnings ESP of +0.38% and a Zacks Rank of 3. Casey's General Stores is anticipated to register a top-line increase from the last fiscal year’s quarterly reading when it reports fourth-quarter fiscal 2022 results. The Zacks Consensus Estimate for CASY’s revenues is pegged at $3,439 million, indicating a rise of 44.6% from the figure reported in the prior fiscal year’s quarter.

The Zacks Consensus Estimate for Casey's General Stores’ quarterly earnings is pegged at $1.54 per share, suggesting an improvement of 37.5% from the last fiscal year’s quarterly number. The company has a trailing four-quarter earnings surprise of 21.6%, on average.

Chipotle Mexican Grill (CMG - Free Report) currently has an Earnings ESP of +2.26% and a Zacks Rank of 3. The company is likely to register top and bottom-line growth when it reports second-quarter fiscal 2022 earnings. The consensus mark for Chipotle Mexican’s quarterly revenues is pegged at $2.24 billion, which suggests an 18.6% growth from the figure reported in the prior-year quarter.

The consensus mark for quarterly earnings is pegged at $9.06 per share. The consensus estimate for CMG suggests growth of 21.5% from the year-ago quarter’s levels. Chipotle Mexican has a trailing four-quarter earnings surprise of 9.3%, on average.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.