Smucker Touches 52-Week High - Analyst Blog
Shares of The J.M. Smucker Co. ( SJM ) hit a new 52-week high of $99.29 on Mar 28 and eventually closed at $99.16, generating a return of approximately 11.2% year-to-date. Smucker's shares have been riding high since it reported solid fiscal third quarter results on Feb 15. Smucker also slashed its packaged coffee prices on Feb 19, which further boosted the share price.
This food and beverage company beat its previous 52-week high of $97.75 attained on Mar 8. The company's long-term estimated EPS growth rate is 8.93%. Average volume of shares traded over the last three months came in at approximately 561K.
Solid Third Quarter Performance
Smucker posted strong fiscal third quarter results beating the Zacks Consensus Estimate for both revenue and earnings. The company's continued focus on its brands through innovations and promotional offerings, strategic acquisitions, improving volumes of K-cups, and effective utilization of cash through buybacks drove the earnings.
The company's earnings of $1.47 per share jumped approximately 20% year over year in the third quarter, primarily driven by increased sales growth and lower share count due to share buybacks. Net sales growth of 6% was driven by favorable sales mix and benefits from the acquisition of Sara Lee Corporation's North American foodservice coffee and hot beverage business in January last year. Volume gains in the higher priced K-Cups coffee brand and peanut butter business also fueled growth.
In addition, the company managed to offset higher peanut costs in the quarter by acquisition gains, favorable sales mix and lower green coffee costs. This was also reflected in higher gross and operating margins in the third quarter.
Smucker has also raised the lower end of its adjusted earnings guidance to a range of $5.17 to $5.22 per share from 5.12 to $5.22 per share announced previously. The company has also increased its fiscal 2013 earnings guidance in the first and second quarters, reflecting the company's potential to drive profits in the coming quarters.
Slash in Coffee Prices
Following the third quarter earnings, Smucker slashed the list prices by an average 6% for its flagship brand Folgers and licensed brand Dunkin' Donuts and majority of its packaged coffee products sold in the U.S. The company has cut its prices for the third time since year 2011 in response to decline in green coffee costs.
Other Stocks to Consider
Stocks in the food industry that are portraying strong upward trend in the bourses are Flower Foods Inc ( FLO ), Conagra Foods Inc ( CAG ) and J&J Snack Foods Corp ( JJSF ). While Flower Foods and J&J Snack carry a Zacks Rank #1 (Strong Buy), Conagra holds a Zacks Rank #2 (Buy).
CONAGRA FOODS (CAG): Free Stock Analysis Report
FLOWERS FOODS (FLO): Free Stock Analysis Report
J&J SNACK FOODS (JJSF): Free Stock Analysis Report
SMUCKER JM (SJM): Free Stock Analysis Report
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