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How Did J.M. Smucker Perform in 1Q17?

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Price movement

J.M. Smucker (SJM) has a market cap of $16.7 billion. It fell by 8.1% and closed at $143.63 per share on August 23, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were -5.1%, -6.7%, and 18.2%, respectively, on the same day. J.M. Smucker is trading 6.3% below its 20-day moving average, 4.7% below its 50-day moving average, and 9.8% above its 200-day moving average.

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Related ETF and peers

The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests 2.9% of its holdings in J.M. Smucker. RHS tracks an equal-weighted index of large-cap US consumer staples stocks drawn from the S&P 500. RHS’s YTD price movement was 10.0% on August 23.

The market caps of J.M. Smucker’s closest peers are as follows:

  • Mondelez International (MDLZ) – $67.5 billion
  • Hormel Foods (HRL) – $19.8 billion
  • ConAgra Foods (CAG) – $20.3 billion

Performance in fiscal 1Q17

J.M. Smucker reported fiscal 1Q17 net sales of $1.81 billion—a fall of 7.2% compared to net sales of $1.95 billion in fiscal 1Q16. Sales of US retail coffee, US retail consumer foods, US retail pet foods, and international and foodservice fell by 9.2%, 7.8%, 5.5%, and 3.5%, respectively, in fiscal 1Q17—compared to fiscal 1Q16. The company’s gross profit margin and operating income rose by 6.6% and 10.0%, respectively, in fiscal 1Q17—compared to the same period last year.

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Its net income and EPS (earnings per share) rose to $170.0 million and $1.46, respectively, in fiscal 1Q17—compared to $136.4 million and $1.14, respectively, in fiscal 1Q16. It reported non-GAAP EBITDA (earnings before interest, tax, depreciation, and amortization) and non-GAAP EPS (earnings per share) of $400.6 million and $1.86, respectively, in fiscal 1Q17—a rise of 6.6% and 16.3%, respectively, compared to fiscal 1Q16.

J.M. Smucker’s cash and cash equivalents fell by 0.18% and its inventories rose by 12.8% in fiscal 1Q17—compared to fiscal 4Q16. Its current ratio rose to 1.4x and its long-term DE (debt-to-equity) ratio fell to 1.08x in fiscal 1Q17—compared to a current ratio and long-term DE ratio of 1.3x and 1.11x, respectively, in fiscal 4Q16.

Projections

The company made the following projections for fiscal 2017:

  • comparable net sales growth of 0% to -1%
  • adjusted EPS of $7.60–$7.75
  • free cash flow of $1.0 billion
  • capital expenditures of $240 million
  • effective tax rate of 33.5%

In the next part, we’ll look at Honda Motor Company (HMC).

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