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Valens Research

SJM - Embedded Expectations Analysis - 2021 04 16

The J. M. Smucker Company (SJM:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with a 15.9x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may be concerned about sales growth, gross profit margins, and incremental cost and pricing headwinds

Specifically, management may lack confidence in their ability to sustain overall sales growth, particularly for the Nutrish brand, Uncrustables, and their e-commerce business, and mitigate gross profit declines, especially in their pet foods business. Moreover, they may lack confidence in their ability to further increase market share across their portfolio, maintain long-term increases in product consumption, and execute a consumer-centric strategy across all channels. Furthermore, management may lack confidence in their ability to maintain a healthy gross profit margin, continue optimizing their marketing investments, and use cash flows to pay dividends, repurchase shares, and pay down debt. Finally, they may have concerns about incremental cost and pricing headwinds, the impact of inventory stock-ups, and the progress of their realignment of their corporate support organization
Underlying
J.M. Smucker Company

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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Valens Research
Valens Research

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