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J.M. Smucker’s Impressive Q3 Results Lift Its Stock Higher

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Key takeaways

On February 26, J.M. Smucker (SJM) posted stronger-than-expected third-quarter results for the period ending January 31. J.M. Smucker shares closed ~5% higher following the upbeat results, which impressed investors on multiple fronts.

J.M. Smucker’s top line was slightly ahead of analysts’ expectation. Benefits from the Ainsworth acquisition and the improved volumes and mix supported the top-line growth. Analysts expected lower pricing to hurt J.M. Smucker’s top-line growth rate. However, pricing remained flat. The declines in the Coffee segment were offset by higher pricing in the Pet segment.

J.M. Smucker’s adjusted gross margin improved on a YoY (year-over-year) basis, which is impressive given the lower net price realization in the Coffee segment and higher costs in the Pet segment. The improved volumes and mix drove the company’s organic sales growth rate and its gross margins.

The company’s adjusted EPS fell 9.6% on a YoY basis, which reflected increased interest expenses and a higher adjusted effective tax rate. However, the EPS beat analysts’ estimate due to improved organic sales and gross margin expansion.

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Stock performance 

J.M. Smucker stock has risen 13.5% on a YTD basis as of February 26. Mondelēz (MDLZ), General Mills (GIS), and Conagra Brands (CAG) stock rose 18.5%, 20.3%, and 9.4%, respectively. Kraft Heinz (KHC), Kellogg (K), and Campbell Soup (CPB) stock fell 23.0%, 1.9%, and 0.2%, respectively.

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