uploads///JM Smuckers Actual EPS versus Estimates

What Could Benefit J.M. Smucker’s 1Q17 Earnings?



Earnings per share

In the previous parts of this series, we discussed the estimated revenue for J.M. Smucker (SJM) for fiscal 1Q17 and what could drive down revenue growth. Now, let’s look at analysts’ EPS (earnings per share) estimates and management’s guidance for 2017.

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Fiscal 2017 EPS estimates

Analysts are expecting J.M. Smucker’s adjusted EPS to be $1.74 in fiscal 1Q17 compared to 1Q16 EPS of $1.32. This represents a tremendous rise of 32%. In the above chart, you can see that the company beat analysts’ expectations in all of the quarters in fiscal 2016. We can expect that this trend will continue in 1Q17 as well.

Earnings are expected to show tremendous rises in all of the quarters of fiscal 2017. For 2Q17, 3Q17, and 4Q17, EPS is estimated to rise by 29%, 29%, and 23%, respectively. For fiscal 2017, analysts expect earnings to rise by 25% to $7.7 compared to EPS of $6.1 in fiscal 2016.

Outlook for 2017

J.M. Smucker talked about its earnings guidance during its 4Q16 earnings release. Now, the updated adjusted non-GAAP (generally accepted accounting principles) EPS range is $7.60–$7.75. This estimate is based on the share count after the company repurchased 3.4 million shares in fiscal 4Q16, keeping the outstanding number of shares at 116.6 million. The updated guidance includes $100 million worth of incremental synergies in fiscal 2017 and excludes its amortization expense of $208 million, or $1.18 per diluted share.

Earnings estimates for peers

J.M. Smucker’s peers in the packaged food industry include McCormick & Company (MKC), Lancaster Colony (LANC), and Flowers Foods (FLO):

  • McCormick & Company’s EPS for fiscal 3Q16 is expected to rise by 11%.
  • Lancaster Colony’s EPS for fiscal 4Q16 is projected to rise by 11%.
  • Flowers Foods’ EPS for fiscal 3Q16 is expected to fall by 7%.

To gain exposure to J.M. Smucker, you can invest in the iShares Morningstar Mid Core ETF (JKG) and the PowerShares S&P 500 Low Volatility Portfolio (SPLV). They invest ~2% of their portfolio in J.M. Smucker.


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