This Food Retailer Is A Good Investment Ahead Of Earnings

Photo Credit: Andrew h

The J.M. Smucker Company (SJM) Consumer Discretionary - Food Staples | Reports June 9, Before Market Opens

Key Takeaways

• The Estimize consensus is calling for earnings per share of of $1.21 on $1.73 billion in revenue, 2 cents higher than Wall Street on the bottom line and right in line on the top
• The recent acquisition of Big Heart Pet Brands establishes Smucker’s as a major player in the pet food industry
• Further acquisitions are expected to carry earnings and revenue in the fourth quarter and fiscal 2017
• What are you expecting for SJM? Get your estimate in here!

The J.M. Smucker Company is scheduled to report fourth quarter earnings tomorrow, before the market opens. The company is best known for a family of brands including Smuckers Jelly, Jif Peanut Butter, and Folgers coffee. Many of its products are found at grocery stores and retailers throughout North America. Smucker’s recently expanded its portfolio with the acquisition of Big Heart Pet Brands. The deal valued at over $3.2 billion places Smucker’s as a major player in the pet food industry. Both earnings and revenue have seen a considerable jump in the three quarters following the acquisition.

The Estimize consensus is calling for earnings per share of of $1.21 on $1.73 billion in revenue, 2 cents higher than Wall Street on the bottom line and right in line on the top. Compared to a year earlier this represents a projected increase in both profits and revenue by 23% and 45%, respectively. A significant portion of the robust growth numbers is attributable to the acquisition of Big Heart Pet Brands. The stock has reacted well to earnings, increasing 18.52% in the past 12 months.

Smucker’s currently breaks out earnings into 4 major reporting segments: Coffee, Consumer Foods, Pet Foods, and International Foods. Last quarter, the company saw weak sales growth in each of its segments with consumer and international food services resulting in negative growth. Profit, on the other hand, remained strong, led by 30.6% margins in its retail coffee sector. Constant efforts to expand and innovate through acquisitions should bode well moving forward

The company should expect to see strong growth in coffee volume in upcoming quarters driven by lower coffee prices. Additionally, Dunkin Donuts K-Cup pods, produced by Smuckers, have started to gain traction. The acquisitions and divestitures are expected to drive profits for the fourth quarter and fiscal 2017.