Why J.M. Smucker Stock Could Remain Pressured
Analysts expect a sluggish quarter
J.M. Smucker (SJM) is set to announce its fiscal 2Q18 earnings next week. Analysts expect the second quarter to remain soft and project a YoY (year-over-year) decline in its sales and profitability.
The company’s top line is likely to remain muted as a continued decline in its coffee segment, unfavorable mix, and increased competition in the cat food segment is likely to hurt sales. Besides, increased commodity prices, higher promotional and marketing spending and low pricing in the pet segment could lead to lower margins and lower EPS (earnings per share).
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SJM stock performance
SJM stock has fallen 19.9% on a YTD (year-to-date) basis as of November 9, 2017. Tepid sales and pressure on margins led investors to dump the stock. Going forward, the company’s financials are likely to remain challenged as soft demand, increased competition, and higher commodity costs could continue to remain a drag.
In comparison, stock prices for the majority of packaged food manufacturing companies are also witnessing a downward trend. Kellogg (K), Conagra (CAG), General Mills (GIS), Kraft Heinz (KHC), Mondelēz (MDLZ), and Campbell Soup (CPB) stock have witnessed a YTD decline of 14.2%, 14.1%, 16.2%, 9.1%, 6.7%, and 24.5%, respectively. However, Hershey (HSY) stock is up 4.2%. Meanwhile, the S&P 500 Index (SPX-INDEX) has risen 15.4% on a YTD basis.