The J. M. Smucker Co.
) were bolstered after a strong fiscal first quarter performance,
which included a dividend yield of 2.5% and an improved sales
guidance. With strong estimate revisions, the jam and jelly staple
hit a new 52-week high of $87.81 on October 4. Furthermore, this
Zacks #2 Rank (Buy) is expected to grow 10.1% in fiscal 2013.
Strong First Quarter
On August 17, Smucker reported fiscal first quarter adjusted
earnings of $1.17 per share, which surpassed last year's $1.12 by
4.5% and exceeded the Zacks Consensus Estimate of $1.00 by 17%.
Net sales in the quarter increased 15% year over year to $1.36
billion, primarily driven by volume gains on the back of product
innovation and productivity initiatives. The company's acquisition
of the North American foodservice coffee and hot beverage business
of Sara Lee Corporation (SLE) on January 3, 2012 also contributed 7
percentage points to net sales growth. The revenue result was in
line with the Zacks Consensus Estimate.
Smucker paid a dividend of 52 cents per share in the first quarter
of fiscal 2013, reflecting an 8.0% increase from the payout in the
year-ago quarter. The current dividend payment affirms a yield of
Smucker anticipates net sales for fiscal 2013 to increase 7% over
the prior-year period, reflecting contribution from the Sara Lee
business. Adjusted earnings are expected at the higher end of its
$5.00 to $5.10 per share range.
Smucker is expected to report its fiscal second quarter results on
November 16. The Zacks Consensus Estimate is pegged at $1.44 per
share. The company has beaten the Zacks Consensus Estimate in 8 of
the past 10 quarters, delivering an average earnings surprise of
6.6% over that period.
Earnings Estimates Advance
Over the past 60 days, the Zacks Consensus Estimate for fiscal 2013
increased by 11 cents or 2.2% to $5.21, indicating year-over-year
growth of 10.1%. The Zacks Consensus Estimate for fiscal 2014
advanced 6 cents or 1.1% to $5.66 over the same period,
representing growth of 8.7%.
Smucker's valuation looks reasonable on a price-to-book (P/B)
basis. Smucker currently trades at a P/B of 1.78x, which is at a
discount of 2.7% versus its peer group average of 1.83x. On a
trailing 12-month basis, the stock is trading in line with the peer
group average of 17.6x.
Chart Echoing Consistent Rise
Shares of Smucker have been consistently rising since early-August
2012 following solid quarterly results. Moreover, the stock is
currently trading above its 200-day and 50-day moving averages,
which stand at $78.26 and $83.44, respectively. Volume is strong,
averaging roughly 654K daily.
Given its strong brand portfolio, along with acquisition benefits,
rising earnings estimates, robust growth projections and a healthy
dividend yield, Smucker exhibits strong upside potential going
forward. In addition, higher coffee prices, which had crippled the
margins of the company earlier, are expected to stabilize in fiscal
2013. This will eventually improve volumes and thus lead to higher
profits for the company.
The J. M. Smucker Co. is the leading marketer of jams, jellies,
preserves, and other fruit spreads in the U.S. They are also the
leader in dessert toppings, natural peanut butter, and health and
natural foods juice products, and market a wide variety of other
specialty products throughout the U.S. and in many foreign
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