Bank of America Merrill Lynch Rated SJM Stock as ‘Neutral’



Price movement

J.M. Smucker (SJM) has a market cap of $14.7 billion. It rose 0.59% to close at $126.75 per share on December 6, 2016. The stock’s weekly, monthly, and year-to-date (or YTD) price movements were -0.41%, -1.4%, and 5.0%, respectively, on the same day. SJM is trading 0.51% below its 20-day moving average, 2.5% below its 50-day moving average, and 6.0% below its 200-day moving average.

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Related ETF and peers

The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) invests 2.6% of its holdings in SJM. The YTD price movement of RHS was 0.70% on December 6.

The market caps of SJM’s closest competitors are as follows:

  • Mondelez International (MDLZ): $63.3 billion
  • Hormel Foods (HRL): $17.4 billion
  • ConAgra Foods (CAG): $16.5 billion

SJM’s rating

On December 6, 2016, Bank of America Merrill Lynch initiated coverage of J.M. Smucker with a “neutral” rating and also set the stock’s price target at $130.0 per share.

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J.M. Smucker’s performance in fiscal 2Q17

J.M. Smucker reported fiscal 2Q17 net sales of $1.9 billion, a YoY (year-over-year) fall of 7.9% as compared to net sales of $2.1 billion in fiscal 2Q16. Sales of US retail coffee, US retail consumer foods, US retail pet foods, and international and foodservice fell 5.9%, 13.5%, 6.3%, and 2.5%, respectively, YoY in fiscal 2Q17.

The company’s gross profit margin and operating margin expanded by 90 basis points and 70 basis points, respectively, YoY in fiscal 2Q17. Its net income and EPS (earnings per share) rose to $177.3 million and $1.52, respectively, in fiscal 2Q17 as compared to $176.0 million and $1.47, respectively, in fiscal 2Q16. The company reported non-GAAP EPS of $2.05 in fiscal 2Q17, a YoY rise of 7.3%.

SJM’s cash and cash equivalents and inventories rose 10.9% and 14.3%, respectively, in fiscal 2Q17 as compared to fiscal 4Q16. It reported free cash flow of $102.6 million in fiscal 2Q17, a YoY fall of 51.4%.


SJM has made the following projections for fiscal 2017:

  • comparable net sales growth: 0% to -1%
  • adjusted EPS: $7.60–$7.75
  • free cash flow: $1 billion
  • capital expenditures: $240 million
  • effective tax rate: 33.0%

Now we’ll discuss McCormick & Company (MKC).


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