Smucker: Will Next Year Recover 2018's Market Loss?

This week I'm seeking a prestigious and long-term dividend paying stock from the consumer defensive sector. 

That defensive sector includes thirteen industries all related to providing those convenient packaged goods we've just gotta have. Industries like: beverages, brewed, soft, or distilled; confections; discount stores; education & training; farm products; food distribution; grocery stores; household & personal products; packaged goods; pharmaceutical retailers; tobacco.

Today I'm reviewing a large-cap packaged foods firm named The J. M. Smucker Company. It's trading ticker symbol is SJM. 

JM Smucker Co operates in the consumer foods industry. It operates in four segments: U.S. Retail Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and International and Away From Home. 

The company primarily offers coffee, pet food and pet snacks, peanut butter, fruit spreads, shortening and oils, baking mixes and ready-to-spread frostings, frozen sandwiches, flour and baking ingredients, juices and beverages, and portion control products. 

It also provides dog snacks, natural shelf stable juices, ice cream toppings, flours, pickles, canned milk, premium pet food products, and foodservice hot beverages. 

The company offers its products under numerous brands: Folgers, Dunkin' Café Bustelo, Jif, Smucker's, Crisco, Pillsbury, Uncrustables, Meow Mix, Milk-Bone, Natural Balance, Kibbles 'n Bits, 9Lives, Pup-Peroni, Nature's Recipe, 1850, Robin Hood, Five Roses, R.W. Knudsen Family, Sahale Snacks, Bick's, Rachael Ray, and Nutrish brands. 

It sells its products through direct sales and brokers to food retailers and wholesalers, and through retail channels, and foodservice distributors and operators.

The company was founded in 1897 and is headquartered in Orrville, Ohio.

I use three key data points to gauge the value of any dividend equity or fund like The J. M. Smucker Company: 

(1) Price

(2) Dividends

(3) Returns

Besides those three, four more keys will finally unlock an equity or fund in which to invest.

But those first three primary keys, best tell whether a company has made, is making, and will make money. 

SJM Price

Smucker's price per share was $102.45 at yesterday's market close. A year ago its price was $104.93 for a drop of $2.48 per share.  

Assuming Smucker's price will trade in the range of $100 to $135 next year, Kroger's current $102.45 price could recover and grow $18.00 to $120.45 by late-September, 2019. 

SJM Dividends

Smucker's most recent quarterly dividend was $0.85 declared July 16th and paid September 4th. That recent dividend was increased from $0.78 in September.  

At this most recent $0.85 quarterly rate, Smucker's annual dividend is calculated at $3.40 yielding 3.3% at yesterday's closing $102.45 price.

Gains For SJM?

Adding the $3.40 estimated annual dividend to my estimated $18.00 annual price upside for Smucker makes a $21.40 potential gross annual per share gain, which is reduced by the costs to trade the shares.  

 A little over $1,000.00 invested today at the $102.45 recent price buys 10 The J.M. Smucker Company shares. 

A $10 broker fee paid half at purchase and half at sale costs $1.00 per share

Subtracting that $1.00 brokerage cost from the estimated $21.40 gross annual gain leaves a net gain of $20.40 X 10 shares 

= $204.00

or about a 20% net gain on a $1,024.50 investment.

Therefore, The J.M. Smucker Company, whose trading ticker symbol is SJM, now shows a possible 20% net gain including a 3.3% dividend yield. 

Eighteen brokers cover this stock:

Three say SJM is a stock to "buy".

One says SJM will "outperform" its peers.

Nine say SJM is a stock to "hold".

Three say SJM will "underperform" its peers.

Two brokers say "sell" SJM.

Thus, the analyst recommendation number is 3.0 or "hold".

The median price target set by those eighteen brokers is  $11.70 under my annual upside estimate to a $120.40 price target for SJM. 

So, you could look at all these speculative numbers this way, the J.M. Smucker Company, whose trading ticker symbol is SJM, has made money, is making money, and could net a 5% to an optimistic 20% net annual gain including a 3.3% dividend yield. It could be more, it could be less.

The above speculation is based on past year performance. Actual results remain to be seen. Those results will determine if The J.M. Smucker Company is worth your time and money.