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Smucker (SJM) to Report Q1 Earnings: Factors Setting the Tone

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The J. M. Smucker Company (SJM - Free Report) is slated to release first-quarter fiscal 2020 results on Aug 27. This renowned provider of pet foods, and consumer foods and beverages delivered a positive earnings surprise close to 6% in the last reported quarter. It delivered an average positive earnings surprise of 2.1% in the trailing four quarters.  

Let’s see what’s in store for the company this time around.

The J. M. Smucker Company Price and EPS Surprise

The J. M. Smucker Company Price and EPS Surprise

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

What to Expect?

The Zacks Consensus Estimate for the fiscal first-quarter earnings has gone down over the past 30 days to $1.75, which suggests a decline of 1.7% from the year-ago period’s reported figure. The consensus mark for revenues is $1,886 million, indicating a drop of 0.9% from the year-ago quarter’s reported figure.

Factors to Influence Q1 Results

The divestiture of the U.S. baking business is likely to dent Smucker’s performance in the to-be-reported quarter. The same was also witnessed in the last reported quarter. Apart from this, planned exits of some of the pet food products have also been a drag on the company’s performance and remain a worry. Further, the company’s selling, distribution and administrative (SD&A) expenses have been rising for a while. Also, interest expenses were high throughout 2019. Persistence of these trends along with low net price realization in most segments is a concern for the company's performance in the quarter under review.

Nonetheless, Smucker is likely to get some respite from its cost-saving measures. Also, its strong digital channel, and gains from alliances and buyouts will boost the top line. To this end, the buyout of Ainsworth has been bolstering the performance of the U.S. Retail Pet Foods category and the company’s overall top line. Many other food companies like TreeHouse Foods (THS - Free Report) , Sysco Corporation (SYY - Free Report) and Conagra Brands (CAG - Free Report) , among others, are benefiting from acquisitions.

Additionally, Smucker has formed key partnerships with quite a few coffee companies. Its agreements with Keurig Green Mountain and Dunkin’ Brands Group to manufacture and sell the K-Cup category of products have been yielding positive results since fiscal 2016 and bode well for the quarter to be reported.

Let’s see if such upsides can fully offset the hurdles this time around.

What the Zacks Model Unveils

Our proven model doesn’t show a beat for Smuckerthis earnings season. For this to happen, a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though Smucker has a Zacks Rank #3 (Hold), its Earnings ESP of -1.59% makes surprise prediction difficult.

You can see the complete list of today’s Zacks #1 Rank stocks here.

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