Opinions
Paul Harris, CFA
J. M. Smuckers Co.
SJM-N
BUY
Aug 29, 2013
$105.800
Stock price when the opinion was issued
food processing
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HOLD
They have a large proportion of their business is coffee. They just made a big pet food acquisition. Debt to equity ratios for these kinds of companies tend to be high because they have a high credit rating due to the fact that they are inelastic – people have to buy the products regardless. Their problem is that their revenues are starting to slide. Little eCommerce startups have eroded 3% of all the revenues of all the big guys. There is nothing wrong with the company and it is a matter of how quickly they can get the revenues back up.
food processing
BUY ON WEAKNESS
Stockchase Research Editor: Michael O'Reilly The company best known for jam, also provides pet foods, coffee and much more. Its recent earnings were so strong the company has increased its guidance for 2021. Management projects $8.20-$8.60 EPS, up from $7.90-$8.30 for next year. Recent earnings of $2.37 per share beat estimates of $1.67. This caused share prices to pop recently, so we would be looking to buy on a pullback towards $115. It pays a good dividend with a 51% payout ratio. Yield 2.96%
food processing
TOP PICK
Stockchase Research Editor: Michael O'Reilly We are being rewarded for our patience as this was a buy on weakness target. The company best known for jam, also provides pet foods, coffee and much more. Its recent earnings were so strong the company has increased its guidance for 2021. Management projects $8.20-$8.60 EPS, up from $7.90-$8.30 for next year. Recent earnings of $2.37 per share beat estimates of $1.67. It pays a good dividend with a 51% payout ratio. We would buy this with a stop-loss at $103. Yield 3.06% (Analysts’ price target is $117.40)
food processing
DON'T BUY
Incredibly well run. 40% of sales and 50% of profits is from coffee. Huge margins of 25% on coffee. Their jellies and jams, etc. continues to do well. They are very great act making small acquisitions in specialty things. Had some issues on the costs of inputs into their products, which has hurt margins a little. Thinks this will be stabilizing. They also increase dividends and buybacks shares. Trades at about 18X earnings with a 2.1% yield.