To The Moon

$JM Smucker(SJM)$

Company History

J.M. Smucker was founded in 1897 by Jerome Monroe Smucker, who started by selling homemade cider and apple butter from a horse-drawn wagon. According to family legend, he used fruit from trees planted by Johnny Appleseed.

By 1942, Smucker’s fruit spreads had become a nationally recognized brand. The company went public in 1959 and has grown steadily through product innovation and strategic acquisitions.

Earning Overview

Packaged food giant J.M. Smucker saw its stock tumble 15.59% following a lackluster fiscal Q1 2025 earnings report. The company missed Wall Street's revenue estimates and issued full-year EPS guidance that came in below expectations. The soft topline performance was driven by weaker demand across several categories — including dog snacks, sweet baked goods, fruit spreads — as well as a decline in contract manufacturing revenue following the divestiture of certain pet food brands.

On a more positive note, Smucker managed to outperform on gross margins, EPS, and EBITDA. Management also provided fiscal 2026 guidance that called for 3% growth at the midpoint — a slowdown compared to the 7% achieved in the prior year. Still, the overall results pointed to a weaker quarter.

Is This Overreaction a Buying Opportunity?

The stock market often overreacts to short-term developments, and sharp sell-offs can open the door to attractive entry points for long-term investors. That could be the case with J.M. Smucker.

Historically, Smucker’s stock has been relatively stable, registering only two daily moves greater than 5% over the past year. This recent decline stands out and suggests that the Q1 report significantly altered investor sentiment.

So far in 2025, the stock has fallen 15.1%. Trading at $94.58 per share, it sits 22.7% below its 52-week high of $122.40, reached in August 2024. For longer-term investors, a $1,000 investment in Smucker five years ago would now be worth approximately $869.74 — highlighting recent underperformance, but also suggesting potential upside if fundamentals recover.

Not all the news was negative. While fourth-quarter sales declined 3% year over year, the decrease was just 1% on an adjusted basis—excluding the impact of recent divestitures (Sahale Snacks, Canadian condiments, and Voortman) and foreign exchange fluctuations. However, the downside was still significant.

Adjusted earnings dropped 13% compared to the prior year, and on a GAAP basis, Smucker posted a net loss of $6.85 per share—indicating the company not only earned less, but actually swung to a loss.

For the full fiscal year 2025, Smucker reported a net loss of $11.57 per share, with revenue down 13% year over year.

J.M. Smucker Reports Mixed Q1 FY2025 Results: Revenue Misses, EPS Beats

For the quarter ended April 2025, J.M. Smucker (NYSE: SJM) reported revenue of $2.14 billion, a decline of 2.8% year-over-year. Earnings per share (EPS) came in at $2.31, down from $2.66 in the same period last year.

Revenue fell short of expectations, missing the Zacks Consensus Estimate of $2.19 billion by 2.18%. However, earnings slightly exceeded projections, with EPS beating the consensus estimate of $2.25 by 2.67%.

While headline numbers like revenue and earnings are important, key performance metrics often provide a clearer picture of a company’s underlying health. Comparing these figures to both analyst expectations and prior-year results offers better insight into the stock's likely direction.

Here’s a breakdown of how Smucker performed against Wall Street estimates across its business segments:

• U.S. Retail Frozen Handheld and Spreads: Reported net sales of $449.8 million vs. an average estimate of $462.28 million (–0.2% YoY).

• U.S. Retail Coffee: Revenue of $738.6 million, beating the $715.26 million estimate (+10.9% YoY).

• U.S. Retail Pet Foods: Delivered $395.5 million in net sales, below the $433.66 million forecast (–12.6% YoY).

• International & Away From Home: Generated $308.9 million in sales, slightly under the $310.83 million estimate (+3.1% YoY).

• Sweet Baked Snacks: Came in at $251 million, missing the $270.36 million estimate (–25.5% YoY).

Segment Profits:

• Sweet Baked Snacks: $20 million, significantly below the $53.95 million expectation.

• U.S. Retail Coffee: Strong at $211.2 million vs. the $182.87 million estimate.

• Frozen Handheld and Spreads: $91 million, just under the $93.28 million forecast.

• International & Away From Home: Outperformed with $69.2 million vs. a $62.5 million estimate.

• U.S. Retail Pet Foods: $106.1 million, falling short of the $115.33 million projection.

Corporate Administrative Expenses also came in lower than expected at –$75.1 million, compared to the estimated –$93.98 million.

Business Overview

Today, Smucker operates in three primary segments: Pet Food, Coffee, and Consumer Foods.

U.S. Retail Pet Foods: Sales for the segment declined 13% year-over-year to $395.5 million, missing the Zacks Consensus Estimate of $434 million. The drop was primarily driven by an 11-percentage-point negative impact from volume/mix, while lower net pricing contributed an additional 2-percentage-point decline. Segment profit fell 7% to $106.1 million.

U.S. Retail Coffee: This segment delivered strong results, with sales rising 11% to $738.6 million—above the $715 million consensus estimate. Growth was driven entirely by a 10% increase in net price realization, while volume/mix was flat. Segment profit edged up $0.9 million to $211.2 million.

U.S. Retail Frozen Handheld and Spreads: Sales came in at $449.8 million, slightly down by $0.7 million year-over-year and below the $462 million estimate. A 1-percentage-point boost from volume/mix was offset by a 1-percentage-point decline in net price realization. Segment profit dropped 5% to $91 million.

Sweet Baked Snacks: The segment experienced significant weakness, with sales falling 26% year-over-year to $251 million—missing the $270 million consensus. Adjusted for the impact of divestitures, sales still declined 14%. Both volume/mix and net pricing negatively affected results. Segment profit plunged 72% to $20 million.

International and Away From Home: Sales increased 3% to $308.9 million, just under the $311 million consensus. Excluding currency headwinds, sales grew 4%. A 6-percentage-point benefit from net price realization was partially offset by a 1-percentage-point drag from volume/mix. Segment profit improved 13% to $69.2 million.

Branding vs. Private Label

Smucker’s strength lies in brand recognition, which protects against commoditization—something private label store brands constantly threaten.

Compared to undifferentiated goods like paper towels, food products offer better branding opportunities. Long-standing brands with loyal consumers form economic moats, and Smucker’s core portfolio is well positioned in this regard.

Financial Overview

Now let’s dive into their financials using the site I’ve been developing (still in the works—but more on that soon).

• Net Sales: $2.14 billion, down ~3% year-over-year and below expectations.

• Adjusted EPS: $2.31, a 13% decline year-over-year, but slightly ahead of analyst forecasts.

• GAAP Net Result: Reported a loss of $6.85 per share due to one-time and impairment charges.

• Free Cash Flow: $298.9 million for the quarter; $816.6 million for the full year.

• Dividends Paid: $114.5 million in Q4 and $455.4 million for the fiscal year.

Segment Performance

• Coffee: Grew 11%, driven by brands like Folgers and Café Bustelo. Growth was supported by multiple price increases despite higher input costs.

• Pet Foods: Fell 13%, with dog snacks showing particular weakness.

• Sweet Baked Snacks: Declined 26%, reflecting softness in that category.

• Frozen Handhelds & Spreads: Performance was relatively flat.

FY 2026 Outlook (ending April 2026)

• Adjusted EPS: Expected to range between $8.50 and $9.50, below Wall Street’s previous expectations.

• Net Sales Growth: Forecasted at 2–4%, with comparable sales growth projected at 3.5–5.5%.

• Gross Margin: Expected to decline to 35.5–36%, down from ~38.8%, primarily due to tariffs and inflation.

• Free Cash Flow: Targeting approximately $875 million.

• Q1 FY 2026 Guidance: Projecting a low-single-digit decline in net sales and roughly a 25% drop in adjusted EPS.

Key Business Drivers & Risks

• Tariffs on Green Coffee: New 10% tariffs are impacting margins—coffee is one of the company's largest product categories.

• Commodity Inflation: Cost pressure remains elevated, especially in coffee and pet food segments.

• Consumer Behavior: Price increases are being met with some resistance, leading to volume softness in certain categories.

• Business Realignment: The company is reshaping its portfolio through acquisitions like Hostess and divestitures in baked goods and condiments.

Debt, Buybacks & Capital Allocation

Most of their debt stems from acquisitions and appears manageable. Historically, Smucker hasn’t prioritized share buybacks—but in the last three quarters, they’ve started repurchasing shares.

They aim to allocate capital evenly—50% toward growth investments, and 50% toward dividends, debt reduction, and buybacks.

Valuation

Looking at SJM, I do like where it's trading—but that doesn't mean I’m randomly jumping in. I’ve said this many times before: price alone isn't enough.

Now, is this a true bottom? Not exactly. These aren't new all-time lows—just levels we haven’t seen since around 2020. So it's a bit tricky.

After years of analysis and thousands of videos, what still matters to me is confirmation through a double break. Here's the first one—but unless we break above $115, I’m not calling this bullish.

For now, I’m staying away until I see better signals and more data. It’s just not something I’m comfortable touching at this stage.

Conclusion

J.M. Smucker is navigating a complex environment marked by cost inflation, shifting consumer demand, and structural portfolio changes. Coffee remains a growth engine, but other categories like pet food and snacks are under pressure. Despite weaker guidance, the company is generating strong free cash flow and maintaining a solid dividend. The next few quarters will be key in determining how well management can offset margin pressures and stabilize earnings growth. My Answer is Hold not a Buy.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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