The board of
The J. M. Smucker Company
) has approved a quarterly dividend hike of 10.0%, thereby
maintaining the trend of rewarding its shareholders consistently.
The new dividend of 64 cents is up from the previous quarterly
dividend of 58 cents per share. The dividend will be paid on Sep 2,
2013 to shareholders of record as of Aug 15.
Smucker has been increasing its rate of quarterly and annual
dividends consistently and this dividend hike represents the
thirteenth consecutive year of dividend growth. However, this year,
the rate of dividend hike was lower than last year's hike of 11.5%.
In Jul 2013, the company had increased its quarterly dividend from
52 cents to 58 cents. (Read:
Smucker Boosts Dividend
Apart from increasing dividends, Smucker also repurchases shares
consistently. In Jan 2013, Smucker's board again increased the
share repurchase authorization by five million shares as it had
done in 2012.
Regular dividend payments and share buybacks reflect the
company's confidence in its fundamentals. The share buyback helps
the company reduce outstanding share count, thereby increasing
earnings per share and return on equity. Apart from bolstering
shareholder value, this strategic move will also lift the
relatively undervalued share price.
Recently, the company reported its fourth-quarter fiscal 2014
adjusted earnings (excluding special project costs) of $1.21 per
share, which declined from the prior-year adjusted earnings of
$1.29 per share by 6% despite benefiting from lower outstanding
share count. The year-over-year decline in earnings was due to
lower operating income and the impact of a higher effective tax
rate, partially offset by benefits from other income and lower
interest expense. Earnings however exceeded the Zacks Consensus
Estimate of $1.16 by 4.3%.
Net sales in the fourth quarter declined 8% year over year to
$1.234 billion. The results slightly lagged the Zacks Consensus
Estimate of $1.236 billion. The decline was due to an 8% decrease
in net price realization in response to lower commodity costs
realized during the year, largely in retail and foodservice coffee.
Smucker Beats on Earnings with Favorable View
Recently, Smucker increased its packaged
of Folgers and Dunkin' Donuts branded coffee products by an average
9% in response to the continuous hike in green coffee costs. (Read:
Smuckers Raises Coffee Price
). The rise in coffee prices drove the guidance for fiscal 2015.
The company now expects net sales to increase year-over-year by
approximately 5% compared to 5% sales decline in fiscal 2014.
Adjusted earnings are expected in the range of $5.95 to $6.05 per
share, higher than $5.64 per share reported in fiscal 2014.
Smucker currently holds a Zacks Rank #3 (Hold).
Some better ranked food companies include
TreeHouse Foods Inc.
Pinnacle Foods Inc
). While TreeHouse Foods and BRF S.A. sport a Zacks Rank #1 (Strong
Buy), Pinnacle carries a Zacks Rank #2 (Buy).
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