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Why Is Smucker (SJM) Down 12.8% 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 lost about 12.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Smucker due for a breakout? 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 Raises EPS Guidance on Q1 Earnings Beat
The J. M. Smucker posted first-quarter fiscal 2024 results. Adjusted earnings of $2.21 per share jumped 32% year over year and surpassed the Zacks Consensus Estimate of $2.07. Net sales amounted to about $1.81 billion, which dropped 4% year over year. The Zacks Consensus Estimate was pegged at $1.84 billion. Excluding noncomparable sales from divestitures and currency movements, net sales surged 21%.
The uptick in comparable net sales can be attributed to the higher volume/mix (mainly due to Jif peanut butter) and improved net price realization (mainly reflecting list price increases for the U.S. Retail, International and Away from Home and U.S. Retail Consumer Foods segments).
The gross profit went up 19% due to increased net price realization and a favorable volume mix, which made up for higher costs. The adjusted gross profit grew 10%. The adjusted operating income jumped 23%.
Segmental Performance
U.S. Retail Pet Foods: The segment’s sales tumbled 40% to $441 million. Excluding non-comparable net sales associated with the pet food brand divestiture, the metric rose 22%. The volume/mix had a 12-percentage point positive impact on net sales, with net price realization boosting net sales by 10 percentage points. The segment’s profit dropped 32% to $81.3 million.
U.S. Retail Coffee: Net sales increased 5% to $625.1 million. The volume/mix had a four-percentage-point positive impact on net sales, while net price realization was neutral. The segment’s profit soared 17% to $170.1 million.
U.S. Retail Consumer Foods: Sales in the segment increased 49% to $464 million. The volume/mix had a 28-percentage point positive impact on sales, mainly due to Jif peanut butter and Smucker’s Uncrustables frozen sandwiches. The net price realization boosted net sales by 22 percentage points. The segment’s profit went up by 93% to $105.7 million.
International and Away from Home: Net sales advanced 17% to $275.1 million. Excluding the impact of noncomparable net sales associated with the pet food brand divestiture and currency movements, net sales grew 22%.
The volume/mix had a 14-percentage-point positive effect, and the net price realization had a positive impact of eight percentage points on combined segment net sales. The segment’s profit more than doubled to $36.4 million.
Fiscal 2024 Guidance
For fiscal 2024, management 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. The comparable net sales view reflects the positive impact of elevated net pricing and a favorable volume/mix.
Net sales are anticipated to decline 10-11% in fiscal 2024. The adjusted EPS for fiscal 2024 is now envisioned in the $9.45-$9.85 band, up from the $9.20-$9.60 band expected earlier. 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 nearly 37%. Also, the adjusted effective income tax rate is envisioned to be 24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Smucker has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward 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) Down 12.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Smucker (SJM - Free Report) . Shares have lost about 12.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Smucker due for a breakout? 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 Raises EPS Guidance on Q1 Earnings Beat
The J. M. Smucker posted first-quarter fiscal 2024 results. Adjusted earnings of $2.21 per share jumped 32% year over year and surpassed the Zacks Consensus Estimate of $2.07. Net sales amounted to about $1.81 billion, which dropped 4% year over year. The Zacks Consensus Estimate was pegged at $1.84 billion. Excluding noncomparable sales from divestitures and currency movements, net sales surged 21%.
The uptick in comparable net sales can be attributed to the higher volume/mix (mainly due to Jif peanut butter) and improved net price realization (mainly reflecting list price increases for the U.S. Retail, International and Away from Home and U.S. Retail Consumer Foods segments).
The gross profit went up 19% due to increased net price realization and a favorable volume mix, which made up for higher costs. The adjusted gross profit grew 10%. The adjusted operating income jumped 23%.
Segmental Performance
U.S. Retail Pet Foods: The segment’s sales tumbled 40% to $441 million. Excluding non-comparable net sales associated with the pet food brand divestiture, the metric rose 22%. The volume/mix had a 12-percentage point positive impact on net sales, with net price realization boosting net sales by 10 percentage points. The segment’s profit dropped 32% to $81.3 million.
U.S. Retail Coffee: Net sales increased 5% to $625.1 million. The volume/mix had a four-percentage-point positive impact on net sales, while net price realization was neutral. The segment’s profit soared 17% to $170.1 million.
U.S. Retail Consumer Foods: Sales in the segment increased 49% to $464 million. The volume/mix had a 28-percentage point positive impact on sales, mainly due to Jif peanut butter and Smucker’s Uncrustables frozen sandwiches. The net price realization boosted net sales by 22 percentage points. The segment’s profit went up by 93% to $105.7 million.
International and Away from Home: Net sales advanced 17% to $275.1 million. Excluding the impact of noncomparable net sales associated with the pet food brand divestiture and currency movements, net sales grew 22%.
The volume/mix had a 14-percentage-point positive effect, and the net price realization had a positive impact of eight percentage points on combined segment net sales. The segment’s profit more than doubled to $36.4 million.
Fiscal 2024 Guidance
For fiscal 2024, management 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. The comparable net sales view reflects the positive impact of elevated net pricing and a favorable volume/mix.
Net sales are anticipated to decline 10-11% in fiscal 2024. The adjusted EPS for fiscal 2024 is now envisioned in the $9.45-$9.85 band, up from the $9.20-$9.60 band expected earlier. 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 nearly 37%. Also, the adjusted effective income tax rate is envisioned to be 24%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Smucker has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, 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 A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward 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.