Stock fell more than 7%

On November 28, the J.M. Smucker Company (SJM) reported lower-than-expected earnings results for the second quarter of fiscal 2019, which ended on October 31. The company also lowered its full-year EPS outlook, which didn’t sit well with investors. SJM fell 7.2% following the soft second-quarter results.

J.M. Smucker’s net sales fell short of analysts’ expectation but rose 5.1% on a YoY (year-over-year) basis thanks to its acquisition of Ainsworth. Meanwhile, its volumes improved YoY. However, lower net price realizations across all its business segments adversely impacted its top line growth rate.

Weaker-than-Expected Q2 2019 Results Dented J.M. Smucker Stock

The company’s adjusted gross profit margin remained weak as benefits from lower green coffee costs were more than offset by a decline in net pricing and higher costs for peanut butter and pet food.

J.M. Smucker’s bottom line improved 7.4% YoY in the quarter, reflecting increased cost savings. However, its earnings came in below Wall Street’s consensus expectation.

SJM has underperformed so far this year

SJM stock is down 18.5% YTD (year-to-date) as of November 28 and has underperformed the broader markets. The S&P 500 Index has risen 2.6% so far this year. In comparison, other major food stocks have also eroded significant value YTD.

For instance, General Mills (GIS), the Kraft Heinz Company (KHC), the Campbell Soup Company (CPB), and Conagra Brands (CAG) have fallen 29.4%, 34.2%, 17.9%, and 13.9%, respectively, YTD.

A couple of analysts have lowered their target prices on SJM following its fiscal 2019 second-quarter results. JPMorgan Chase lowered its target price on SJM stock to $111 from $113. Meanwhile, Morgan Stanley reduced its target price on the stock to $98 from $100.

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