SJM - Embedded Expectations Analysis - 2021 07 09
The J.M. Smucker Company (SJM:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with a 17.3x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about retail sales growth, recent divestitures, and their Pet Food business.Specifically, management may lack confidence in their ability to sustain retail sales growth and maintain improvements in their Away-From-Home segment, particularly with the Uncrustables brand. In addition, they may have concerns about the impact of their Crisco and Natural Balance divestitures and global supply chain challenges. Moreover, management may lack confidence in their ability to effectively engage with their pet retail customers, launch new Pet snack products, and stabilize their overall dog food portfolio. Furthermore, they may worry about customer retention following the pandemic and maintaining at-home consumption of their brands, particularly K-Cups.
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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