The J. M. Smucker Company Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
The J. M. Smucker Company (NYSE:SJM) investors will be delighted, with the company turning in some strong numbers with its latest results. Results were good overall, with revenues beating analyst predictions by 3.2% to hit US$2.1b. Statutory earnings per share (EPS) came in at US$2.32, some 8.9% above whatthe analysts had expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Check out our latest analysis for J. M. Smucker
Taking into account the latest results, the current consensus, from the 13 analysts covering J. M. Smucker, is for revenues of US$7.48b in 2022, which would reflect a definite 8.5% reduction in J. M. Smucker's sales over the past 12 months. Statutory earnings per share are forecast to reduce 9.4% to US$7.62 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$7.43b and earnings per share (EPS) of US$7.92 in 2022. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$117, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values J. M. Smucker at US$127 per share, while the most bearish prices it at US$93.00. This is a very narrow spread of estimates, implying either that J. M. Smucker is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with the forecast 8.5% revenue decline a notable change from historical growth of 1.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 3.2% annually for the foreseeable future. It's pretty clear that J. M. Smucker's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that J. M. Smucker's revenues are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on J. M. Smucker. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for J. M. Smucker going out to 2024, and you can see them free on our platform here..
You still need to take note of risks, for example - J. M. Smucker has 1 warning sign we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
