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Why Is Smucker (SJM) Up 0.7% Since Last Earnings Report?
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It has been about a month since the last earnings report for Smucker (SJM - Free Report) . Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Smucker due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
The J.M. Smucker Q4 Earnings Top Estimates, Rise Y/Y
The J. M. Smucker posted fourth-quarter fiscal 2023 results, wherein adjusted earnings of $2.64 per share jumped 18% year over year and surpassed the Zacks Consensus Estimate of $2.42. Net sales amounted to $2,234.8 million, which advanced 10% year over year and came ahead of the Zacks Consensus Estimate of $2,183 million.
Excluding non-comparable net sales related to divestitures and currency movements, net sales grew 11%. The uptick in comparable net sales can be attributed to the positive net price realization, mainly reflecting list price increases for the U.S. Retail, and International and Away from Home segments. The volume/mix remained neutral compared with the year-ago period.
The gross profit went up 19% due to increased net price realization and a favorable volume mix, partly negated by higher commodity and ingredient, manufacturing as well as packaging expenses. The adjusted gross profit increased 18%. The adjusted operating income grew 16%.
U.S. Retail Pet Foods: The segment’s sales jumped 9% to $785.3 million. Excluding non-comparable net sales associated with the private-label dry pet food businesses’ divestiture, the metric rose 11%. The volume/mix had an adverse impact of one percentage point, made up by the net price realization, which had a favorable 12-percentage point impact on net sales. The segment’s profit jumped 21% to $145.5 million.
U.S. Retail Coffee: Net sales increased 7% to $692.5 million. The volume/mix had a three-percentage-point negative impact, and the net price realization boosted net sales by 10 percentage points. The segment’s profit soared 22% to $200.1 million.
U.S. Retail Consumer Foods: Sales in the segment increased 14% to $453.4 million. The net price realization had a 12-percentage point positive impact on sales. The volume/mix boosted net sales by two percentage points. The segment’s profit rose 9% to $103.4 million.
International and Away from Home: Net sales advanced 12% to $303.6 million. Excluding the impact of the natural beverage and grain businesses’ divestiture and the negative impacts of currency movements, net sales escalated by 15%. Comparable net sales rose 25% for the Away from Home division and 4% for the International division. The volume/mix had a two-percentage-point positive effect, and the net price realization had a positive impact of 13 percentage points on overall net sales. The segment’s profit climbed 38% to $47.6 million.
Financials
The J. M. Smucker exited the quarter with cash and cash equivalents of $655.8 million, long-term debt of $4,314.2 million and total shareholders’ equity of $7,290.8 million. Cash flow provided by operating activities amounted to $437.4 million for the three months ended Apr 30, 2023. Free cash flow was $298.7 million in the quarter.
The J. M. Smucker repurchased nearly 2.4 million shares for $359.5 million in the quarter. The company returned $467.9 million and $797.7 million via dividends and share buybacks in the fourth quarter and fiscal 2023, respectively. Free cash flow and capital expenditures are likely to be $650 million and 550 million, respectively, in fiscal 2024.
Fiscal 2024 Guidance
For fiscal 2024, The J. M. Smucker anticipates comparable net sales to rise 8.5-9.5%. Comparable sales exclude net sales in the year-ago period associated with the divestiture of certain pet food brands. Net sales are anticipated to decline 10-11%. The comparable net sales view reflects the positive impact of elevated net pricing and a favorable volume/mix.
The adjusted EPS for fiscal 2023 is envisioned in the $9.20-$9.60 band. The bottom-line view reflects the positive impact of pricing and volume/mix, partly countered by elevated SD&A expenses. The bottom-line view takes into account an adjusted gross profit margin of 36.5-37%. Also, the adjusted effective income tax rate is envisioned at 24.2%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Smucker has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Smucker has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Smucker (SJM) Up 0.7% Since Last Earnings Report?
It has been about a month since the last earnings report for Smucker (SJM - Free Report) . Shares have added about 0.7% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Smucker due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
The J.M. Smucker Q4 Earnings Top Estimates, Rise Y/Y
The J. M. Smucker posted fourth-quarter fiscal 2023 results, wherein adjusted earnings of $2.64 per share jumped 18% year over year and surpassed the Zacks Consensus Estimate of $2.42. Net sales amounted to $2,234.8 million, which advanced 10% year over year and came ahead of the Zacks Consensus Estimate of $2,183 million.
Excluding non-comparable net sales related to divestitures and currency movements, net sales grew 11%. The uptick in comparable net sales can be attributed to the positive net price realization, mainly reflecting list price increases for the U.S. Retail, and International and Away from Home segments. The volume/mix remained neutral compared with the year-ago period.
The gross profit went up 19% due to increased net price realization and a favorable volume mix, partly negated by higher commodity and ingredient, manufacturing as well as packaging expenses. The adjusted gross profit increased 18%. The adjusted operating income grew 16%.
U.S. Retail Pet Foods: The segment’s sales jumped 9% to $785.3 million. Excluding non-comparable net sales associated with the private-label dry pet food businesses’ divestiture, the metric rose 11%. The volume/mix had an adverse impact of one percentage point, made up by the net price realization, which had a favorable 12-percentage point impact on net sales. The segment’s profit jumped 21% to $145.5 million.
U.S. Retail Coffee: Net sales increased 7% to $692.5 million. The volume/mix had a three-percentage-point negative impact, and the net price realization boosted net sales by 10 percentage points. The segment’s profit soared 22% to $200.1 million.
U.S. Retail Consumer Foods: Sales in the segment increased 14% to $453.4 million. The net price realization had a 12-percentage point positive impact on sales. The volume/mix boosted net sales by two percentage points. The segment’s profit rose 9% to $103.4 million.
International and Away from Home: Net sales advanced 12% to $303.6 million. Excluding the impact of the natural beverage and grain businesses’ divestiture and the negative impacts of currency movements, net sales escalated by 15%. Comparable net sales rose 25% for the Away from Home division and 4% for the International division. The volume/mix had a two-percentage-point positive effect, and the net price realization had a positive impact of 13 percentage points on overall net sales. The segment’s profit climbed 38% to $47.6 million.
Financials
The J. M. Smucker exited the quarter with cash and cash equivalents of $655.8 million, long-term debt of $4,314.2 million and total shareholders’ equity of $7,290.8 million. Cash flow provided by operating activities amounted to $437.4 million for the three months ended Apr 30, 2023. Free cash flow was $298.7 million in the quarter.
The J. M. Smucker repurchased nearly 2.4 million shares for $359.5 million in the quarter. The company returned $467.9 million and $797.7 million via dividends and share buybacks in the fourth quarter and fiscal 2023, respectively. Free cash flow and capital expenditures are likely to be $650 million and 550 million, respectively, in fiscal 2024.
Fiscal 2024 Guidance
For fiscal 2024, The J. M. Smucker anticipates comparable net sales to rise 8.5-9.5%. Comparable sales exclude net sales in the year-ago period associated with the divestiture of certain pet food brands. Net sales are anticipated to decline 10-11%. The comparable net sales view reflects the positive impact of elevated net pricing and a favorable volume/mix.
The adjusted EPS for fiscal 2023 is envisioned in the $9.20-$9.60 band. The bottom-line view reflects the positive impact of pricing and volume/mix, partly countered by elevated SD&A expenses. The bottom-line view takes into account an adjusted gross profit margin of 36.5-37%. Also, the adjusted effective income tax rate is envisioned at 24.2%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
Currently, Smucker has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Smucker has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.