What Made J.M. Smucker’s Stock Rally 15% in June?



Stock trading close to 52-week high

The J.M. Smucker Company (SJM), a food and beverage company based in Orrville, Ohio, showed tremendous growth in its stock price in June. The company’s stock rose by 15% in June alone after it reported an excellent fourth quarter and a strong end to its fiscal 2016.

On June 29, 2016, SJM closed at $149.11, a rise of 12% since it reported its fiscal 4Q16 results on June 9, 2016. It’s trading close to its 52-week high of $149.26 as of June 29.

The company’s stock reacted positively to the its fiscal 4Q16 results and rose by 8% on the same day. Its fourth-quarter earnings results included a 45% rise in its earnings and a 25% rise in its revenue. Both its earnings and its revenue also beat analysts’ estimates.

So far, the stock has risen by 22% in 2016, and it rose by 23% in 2015. J.M. Smucker had outperformed the Market represented by the S&P 500 Index by 19% as of June 29.

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Peers’ stock performances

So far in 2016, Smucker’s peers in the processed and packaged goods industry have also shown positive stock price performances.

  • ConAgra Foods (CAG) has returned 15%.
  • Mondelez International (MDLZ) has returned -2%.
  • Campbell Soup (CPB) has returned 22%.

ConAgra Foods, Mondelez International, and Campbell Soup closed trade at $47.6, $42.97, and $62.82, respectively, on June 29, 2016. The Guggenheim S&P 500 Equal Weight Consumer Staples ETF (RHS) invests 2.6% of its portfolio in J.M. Smucker. It also invests 2.7% in ConAgra, 2.7% in Mondelez International, and 2.5% in Campbell Soup. So far, it has returned 8% in 2016.

In this series

This series will focus mainly on what drove the growth in J.M. Smucker’s stock price and whether more upside is expected. We’ll discuss SJM’s recently reported fiscal 4Q16 performance and how its acquisitions and product innovations drove its performance.

Later, we’ll consider how much J.M. Smucker returned to its shareholders along with its outlook and synergy targets for 2017, which it discussed during its investor presentation last week.

We’ll end the series with a look at Wall Street’s recommendations and target price for the stock.


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