Lower Debt, Pet Integration Progress Lead Us to Raise Smucker’s Valuation; Shares Now Fairly Valued
We are lifting our valuation for narrow-moat Smucker to $134 per share from $108 after reducing the discount rate we apply to the firm’s cash flows to 7% from 8%. Smucker’s progress in reducing leverage after the Big Heart acquisition (fiscal 2017 year-end debt/adjusted EBITDA expected at about 3 times versus around 4 times after the deal closed), in addition to the company’s integration progress, led us to reduce our cost of equity assumption to reflect a reduced risk profile. Our long-term for...Smucker (J.M.) manufactures and markets food and beverage products. The company's principal products are coffee, dog food, pet snacks, cat food, peanut butter, fruit spreads, frozen handheld products, shortening and oils, portion control products, juices and beverages, and flour and baking ingredients. The company has four reportable segments: U.S. Retail Coffee, U.S. Retail Consumer Foods, and U.S. Retail Pet Foods, and International and Away From Home. The U.S. retail market segments represent the sales of food and beverage products to consumers through retail outlets in North America. The International and Away From Home segment represents sales outside of the U.S. retail market segments.
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Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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