J.M. Smucker (SJM) Beats on Q1 Earnings and Revenues
The J. M. Smucker Company (SJM) engages in the manufacture and marketing of branded food products worldwide. The company’s primary products include coffee, peanut butter, fruit spreads, shortening and oils, baking mixes and ready-to-spread frostings, and canned milk.
Strong organic sales growth, product innovation and constant efforts to expand through acquisitions have remained the company’s strong points over the past several quarters. However, the company remains concerned about the declining coffee volumes due to increased prices of Folgers and Dunkin' Donuts branded coffee products, as a result of hike in coffee costs since Jan 2014. The performance of the K-Cup business has also been sluggish since second quarter fiscal 2014. Though Smucker announced a cut in coffee prices in July, which will ultimately ease volume declines, the company expects the impact of reduced coffee costs to be evident from the second quarter of fiscal 2016.
Investors should also note the recent earnings estimate revisions for SJM, as the consensus estimate has been declining slightly over the past 60 days. SJM do not have a decent earnings history. SJM has delivered negative surprise in two of the last four quarters, with one in-line and one positive surprise, making for an average negative surprise of 0.13%.
Currently, SJM has a Zacks Rank #3 (Hold), but that could definitely change following Smucker’s earnings report which was just released. We have highlighted some of the key stats from this just-revealed announcement below:
Earnings: SJM posted earnings of $1.60 per share, significantly beating our consensus of $1.22 per share. Investors should note that these figures take out stock option expenses.
Revenue: SJM posted revenues of $1.95 billion. This exceeded our consensus estimate of $1.89 billion.
Key Stats to Note: The acquired Big Heart business contributed $561.3 million and Sahale Snacks business added $7.7 million to net sales in the first quarter of fiscal 2016. Excluding acquisitions and currency impact, sales grew 5.6% in the reported quarter. The company also launched Dunkin' Donuts K-Cup pods during the quarter and shipped over 100 million cups.
Stock Price: Inactive in pre-market trading.
Check back later for our full write up on this SJM earnings report later!
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