The J.M. Smucker's (SJM) Latest Acquisition Expands Portfolio
The J. M. Smucker Co. SJM actively pursues strategic acquisitions to expand its presence. In this regard, the company concluded the previously announced (On Sep 11, 2023) acquisition of Hostess Brands, a premier snacking company.
In other news, Smucker announced the formation of a new strategic business area — Sweet Baked Snacks, to support its expanded brand portfolio. The move will enable the company to generate synergies while leveraging top-notch expertise in areas like marketing, innovation, supply chain management and commercial activation.
TWNK Acquisition Holds Promise
The latest acquisition includes TWNK’s sweet baked goods brands like Hostess Donettes, Twinkies and DingDongs and the Voortman cookie brand, among others. The buyout also has production facilities in Emporia, KS; Burlington, Ontario; Chicago, IL; Columbus, GA; Indianapolis, IN; and Arkadelphia, AR. Management also took over Hostess Brands’ distribution facility in Edgerton, KS.
The move enhances SJM’s ability to cater to increasing consumer reliance on convenient snacking options. The acquisition of Hostess Brands aids SJM in reaping benefits from the fast-growing sweet baked goods category. The move allows Smucker to leverage TWNK’s expanded distribution model, an impressive innovation engine and considerable production capabilities.
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What’s More?
The Zacks Rank #3 (Hold) company is progressing well with core priorities, which include driving commercial excellence, reshaping portfolio, streamlining cost structure and unleashing its organization to win. Strength in such strategies is helping the company navigate complex supply chain challenges.
Management has always been committed to increasing its focus and resources to reshape the portfolio to achieve sustainable growth across pet food and pet snacks, coffee and snacking categories. On Nov 1, 2023, Smucker sold the Sahale Snacks brand to Second Nature Brands to reshape the portfolio. The move enables the company to increase focus on the continued growth of its Consumer Foods business.
Wrapping Up
The company has been dealing with rising costs for a while. The ongoing cost inflation, supply-chain bottlenecks and the broader macroeconomic landscape continue to affect the company’s results and cause risks for fiscal 2024. SJM’s shares have dropped 25.7% in the past three months compared with the industry’s decline of 11.5%.
That being said, the TWNK acquisition is likely to drive The J. M. Smucker’s growth and innovation story.
3 Appetizing Picks
Lamb Weston LW, which offers frozen potato products, currently sports a Zacks Rank #1 (Strong Buy). LW delivered an earnings surprise of 46.2% in the last reported quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 28.3% and 24.8%, respectively, from the year-ago reported numbers.
Flowers Foods FLO, a packaged bakery food products company, currently has a Zacks Rank #2 (Buy). FLO has a trailing four-quarter earnings surprise of 7.6% on average.
The Zacks Consensus Estimate for Flowers Foods’ current fiscal-year sales suggests growth of 6.7% from the corresponding year-ago reported figure.
The Kraft Heinz Company KHC, a food and beverage product company, currently carries a Zacks Rank #2. KHC has a trailing four-quarter earnings surprise of 9.9% on average.
The Zacks Consensus Estimate for Kraft Heinz’s current fiscal year sales suggests growth of 1.3% from the corresponding year-ago reported figure.
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The J. M. Smucker Company (SJM) : Free Stock Analysis Report
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