Earnings in Focus: The J. M. Smucker Company (NYSE:SJM)

The J. M. Smucker Company (NYSE:SJM) reported earnings for the three months ended Jan2016 on February 23, 2016. The company earned $1.62 per share on revenue of $1.97B. Analysts had been modeling earning per share of $1.62 with $2.05B in revenue.

The J. M. Smucker Company (SJM) on February 23, 2016 announced results for the third quarter ended January 31, 2016, of its 2016 fiscal year.  All comparisons are to the third quarter of the prior fiscal year, unless otherwise noted.

EXECUTIVE SUMMARY

• Net sales increased $533.9 million, or 37 percent, reflecting the contribution of Big Heart Pet Brands (“Big Heart”), acquired in fiscal 2015.


• Net income per diluted share was $1.55, a decrease of 2 percent, as the benefit from Big Heart operations and the gain on the U.S. canned milk divestiture were offset by merger and integration costs, higher interest expense, and the impact of additional shares outstanding.


• Non-GAAP income per diluted share was $1.76, an increase of 14 percent.  Adjusted non-GAAP income per diluted share, which excludes amortization, was $2.05, an increase of 21 percent.  Both measures include a $0.14 per share gain on the U.S. canned milk divestiture.


• Free cash flow was $498.9 million, an increase of 32 percent.


• The Company updated its fiscal 2016 earnings outlook to account for the gain on the U.S. canned milk divestiture, with non-GAAP income per diluted share expected to range from $5.84 to $5.94 and its adjusted non-GAAP income per diluted share expected to range from $6.99 to $7.09.

CHIEF EXECUTIVE OFFICER REMARKS

“We delivered another quarter of solid financial results which, most notably, was attributable to the ongoing momentum for our coffee business,” said Richard Smucker, Chief Executive Officer.  “Our overall performance continues to reflect contributions from our key growth initiatives for the fiscal year.  These include launching a number of on-trend products such as Dunkin’ Donuts K-Cup pods, providing consumers lower pricing on Folgers roast and ground offerings, expanding distribution for the Natural Balance brand into the largest pet specialty retailer, and delivering on our cost savings and working capital initiatives.  In addition, we are now just a week away from a key integration milestone related to the Big Heart Pet Brands acquisition, and all activities remain on track.  As we move ahead, our teams remain focused on executing our long-term strategy to deliver continued growth.”

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The J. M. Smucker Company earnings per share showed a decreasing trend of -38.6% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 639%.Analysts project EPS growth over the next 5 years at 10.1%. It has EPS annual decline over the past 5 fiscal years of -4.3% when sales grew 4.3. It reported 37.1% sales growth, and -2.1% EPS decline in the last quarter.

The stock is trading at $129.22, up 26.08% from 52-week low of $104.3. The stock trades down -2.08% from its peak of $132.64 and 4.97% above the consensus price target of $135.64. Its volume clocked up at 0.34 million shares which is lower than the average volume of 0.78 million shares. Its market capitalization currently stands at $15.47B.