NYSE:SJM

Stock Analysis Report

Executive Summary

The J. M. Smucker Company manufactures and markets branded food and beverage products worldwide.

Rewards

Trading at 44.4% below its fair value

Earnings are forecast to grow 21.77% per year

Pays a high and reliable dividend of 3.37%

Risk Analysis

Debt is not well covered by operating cash flow

Large one-off items impacting financial results

Profit margins (7.3%) are lower than last year (17.6%)



Snowflake Analysis

Established dividend payer and good value.


Similar Companies

Kraft Heinz

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Share Price & News

How has J. M. Smucker's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SJM has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.3%

SJM

1.3%

US Food

0.8%

US Market


1 Year Return

2.7%

SJM

13.9%

US Food

25.1%

US Market

Return vs Industry: SJM underperformed the US Food industry which returned 13.9% over the past year.

Return vs Market: SJM underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

SJMIndustryMarket
7 Day3.3%1.3%0.8%
30 Day3.9%0.3%3.1%
90 Day-0.009%8.0%10.9%
1 Year5.9%2.7%17.1%13.9%27.7%25.1%
3 Year-12.8%-19.9%1.4%-6.7%51.3%41.6%
5 Year16.0%1.9%42.8%25.9%77.2%57.6%

Price Volatility Vs. Market

How volatile is J. M. Smucker's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is J. M. Smucker undervalued compared to its fair value and its price relative to the market?

43.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SJM ($104.4) is trading below our estimate of fair value ($187.74)

Significantly Below Fair Value: SJM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SJM is good value based on its PE Ratio (21.3x) compared to the Food industry average (25.4x).

PE vs Market: SJM is poor value based on its PE Ratio (21.3x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: SJM is poor value based on its PEG Ratio (1x)


Price to Book Ratio

PB vs Industry: SJM is good value based on its PB Ratio (1.5x) compared to the US Food industry average (2.1x).


Next Steps

Future Growth

How is J. M. Smucker forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

20.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SJM's forecast earnings growth (21.8% per year) is above the savings rate (1.7%).

Earnings vs Market: SJM's earnings (21.8% per year) are forecast to grow faster than the US market (14.3% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: SJM's revenue (0.2% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: SJM's revenue (0.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SJM's Return on Equity is forecast to be low in 3 years time (10.7%).


Next Steps

Past Performance

How has J. M. Smucker performed over the past 5 years?

12.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SJM has a large one-off loss of $241.6M impacting its October 31 2019 financial results.

Growing Profit Margin: SJM's current net profit margins (7.3%) are lower than last year (17.6%).


Past Earnings Growth Analysis

Earnings Trend: SJM's earnings have grown by 12.8% per year over the past 5 years.

Accelerating Growth: SJM's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SJM had negative earnings growth (-58.3%) over the past year, making it difficult to compare to the Food industry average (-12.1%).


Return on Equity

High ROE: SJM's Return on Equity (6.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is J. M. Smucker's financial position?


Financial Position Analysis

Short Term Liabilities: SJM's short term assets ($1.7B) do not cover its short term liabilities ($2.3B).

Long Term Liabilities: SJM's short term assets ($1.7B) do not cover its long term liabilities ($6.4B).


Debt to Equity History and Analysis

Debt Level: SJM's debt to equity ratio (72.4%) is considered high.

Reducing Debt: SJM's debt to equity ratio has increased from 47.1% to 72.4% over the past 5 years.

Debt Coverage: SJM's debt is not well covered by operating cash flow (19.5%).

Interest Coverage: SJM's interest payments on its debt are well covered by EBIT (5.9x coverage).


Balance Sheet

Inventory Level: SJM has a low level of unsold assets or inventory.

Debt Coverage by Assets: SJM's debt is not covered by short term assets (assets are 0.3x debt).


Next Steps

Dividend

What is J. M. Smucker's current dividend yield, its reliability and sustainability?

3.26%

Current Dividend Yield


Dividend Yield vs Market

company3.3%marketbottom25%1.4%markettop25%3.7%industryaverage2.7%forecastin3Years3.3%

Current dividend yield vs market & industry

Notable Dividend: SJM's dividend (3.37%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: SJM's dividend (3.37%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: SJM's dividends per share have been stable in the past 10 years.

Growing Dividend: SJM's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (70.6%), SJM's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SJM's dividends in 3 years are forecast to be well covered by earnings (43.3% payout ratio).


Next Steps

Management

What is the CEO of J. M. Smucker's salary, the management and board of directors tenure and is there insider trading?

1.0yrs

Average management tenure


CEO

Mark Smucker (49yo)

3.7yrs

Tenure

US$8,056,890

Compensation

Mr. Mark T. Smucker serves as Independent Director of Kimberly-Clark Corp. since September 18, 2019. Mr. Smucker has been the President of The J. M. Smucker Company since April 2015 and its Chief Executive ...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD8.06M) is about average for companies of similar size in the US market ($USD10.76M).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.


Management Age and Tenure

1.0yrs

Average Tenure

49yo

Average Age

Experienced Management: SJM's management team is not considered experienced ( 1 years average tenure), which suggests a new team.


Board Age and Tenure

11.0yrs

Average Tenure

66.5yo

Average Age

Experienced Board: SJM's board of directors are seasoned and experienced ( 11 years average tenure).


Insider Trading

Insider Buying: SJM insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUS$113,00630 Dec 19
Jill Penrose
EntityIndividual
Role
Chief Administrative Officer
Chief People and Administrative Officer
Shares1,098
Max PriceUS$102.92
SellUS$128,48609 Dec 19
Jeannette Knudsen
EntityIndividual
Role
Chief Legal Officer
Chief Legal & Compliance Officer and Secretary
Shares1,196
Max PriceUS$107.43
SellUS$103,26516 Sep 19
Kevin Jackson
EntityIndividual
Shares950
Max PriceUS$108.70
BuyUS$103,42029 Aug 19
Geoff Tanner
EntityIndividual
Role
Head of Marketing
Chief Marketing and Commercial Officer
Shares1,000
Max PriceUS$103.42
SellUS$38,02527 Jun 19
Joseph Stanziano
EntityIndividual
Shares319
Max PriceUS$119.20
SellUS$198,72615 Mar 19
Jeannette Knudsen
EntityIndividual
Role
Chief Legal Officer
Chief Legal & Compliance Officer and Secretary
Shares1,932
Max PriceUS$102.86

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Richard Smucker (71yo)

    Executive Chairman

    • Tenure: 3.7yrs
    • Compensation: US$4.94m
  • Mark Belgya (58yo)

    Vice Chair & CFO

    • Tenure: 10.3yrs
    • Compensation: US$3.46m
  • Mark Smucker (49yo)

    CEO, President & Director

    • Tenure: 3.7yrs
    • Compensation: US$8.06m
  • Tucker Marshall

    Senior VP & Deputy CFO

    • Tenure: 0.2yrs
  • Jeannette Knudsen (49yo)

    Chief Legal & Compliance Officer and Secretary

    • Tenure: 9.4yrs
    • Compensation: US$1.69m
  • Jill Penrose (46yo)

    Chief People and Administrative Officer

    • Tenure: 0.2yrs
  • Aaron Broholm

    Vice President of Investor Relations

    • Geoff Tanner

      Chief Marketing and Commercial Officer

      • Tenure: 0.2yrs
    • Amy Held (45yo)

      Chief Strategy and International Officer

      • Tenure: 1.8yrs
    • Lindsey Tomaszewski

      Senior Vice President of Human Resources

      • Tenure: 0.2yrs

    Board Members

    • Kitty Dindo (70yo)

      Independent Director

      • Tenure: 23.9yrs
      • Compensation: US$242.50k
    • Timothy Smucker (75yo)

      Chairman Emeritus

      • Tenure: 3.7yrs
      • Compensation: US$311.76k
    • Richard Smucker (71yo)

      Executive Chairman

      • Tenure: 3.7yrs
      • Compensation: US$4.94m
    • Alex Shumate (69yo)

      Independent Director

      • Tenure: 11yrs
      • Compensation: US$247.50k
    • Nancy Russell (62yo)

      Independent Director

      • Tenure: 13.4yrs
      • Compensation: US$235.00k
    • Mark Smucker (49yo)

      CEO, President & Director

      • Tenure: 3.7yrs
      • Compensation: US$8.06m
    • Gary Oatey (70yo)

      Independent Director

      • Tenure: 17yrs
      • Compensation: US$235.00k
    • Sandra Pianalto (64yo)

      Independent Director

      • Tenure: 5.4yrs
      • Compensation: US$242.50k
    • Paul Dolan (61yo)

      Independent Director

      • Tenure: 13.8yrs
      • Compensation: US$250.00k
    • Jay Henderson (63yo)

      Independent Director

      • Tenure: 3.4yrs
      • Compensation: US$255.00k

    Company Information

    The J. M. Smucker Company's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: The J. M. Smucker Company
    • Ticker: SJM
    • Exchange: NYSE
    • Founded: 1897
    • Industry: Packaged Foods and Meats
    • Sector: Food, Beverage & Tobacco
    • Market Cap: US$12.295b
    • Shares outstanding: 114.06m
    • Website: https://www.jmsmucker.com

    Number of Employees


    Location

    • The J. M. Smucker Company
    • One Strawberry Lane
    • Orrville
    • Ohio
    • 44667
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    SJMNYSE (New York Stock Exchange)YesCommon SharesUSUSDAug 2000
    JM2DB (Deutsche Boerse AG)YesCommon SharesDEEURAug 2000
    0L7FLSE (London Stock Exchange)YesCommon SharesGBUSDAug 2000
    SJM *BMV (Bolsa Mexicana de Valores)YesCommon SharesMXMXNAug 2000

    Biography

    The J. M. Smucker Company manufactures and markets branded food and beverage products worldwide. It operates in four segments: U.S. Retail Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and International and Away From Home. The company offers mainstream roast, ground, single serve, and premium coffee; peanut butter and specialty spreads; fruit spreads, shortening and oils, and frozen sandwiches; pet food and pet snacks; and foodservice hot beverage, foodservice portion control, and flour products, as well as dog and cat food, frozen handheld products, juices and beverages, and baking ingredient. It provides its products under the Folgers, Café Bustelo, Dunkin’ Donuts, 1850, Jif, Smucker’s, Crisco, Smucker’s Uncrustables, Meow Mix, Kibbles ‘n Bits, 9Lives, Nature’s Recipe, Milk-Bone, Pup-Peroni, Rachael Ray Nutrish, Natural Balance, Robin Hood, and Five Roses brands. The company sells its products through direct sales and brokers to food retailers and wholesalers, club stores, pet specialty stores, discount and dollar stores, drug stores, military commissaries, mass merchandisers, natural foods stores and distributors, and online retailers; and through retail channels, and foodservice distributors and operators. The J. M. Smucker Company was founded in 1897 and is headquartered in Orrville, Ohio. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/21 23:48
    End of Day Share Price2020/01/21 00:00
    Earnings2019/10/31
    Annual Earnings2019/04/30


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.