Core Viewpoint - The J.M. Smucker Co. is committed to removing FD&C colors from all consumer food products by the end of 2027, impacting several product lines including sugar-free fruit spreads and ice cream toppings [1][2] Group 1: Commitment to Product Reformulation - The majority of the company's consumer foods are already free of FD&C colors, and the removal will also affect certain products from the Hostess® brand portfolio [1] - The company aims to stop selling products with FD&C colors to K-12 schools by the 2026/2027 school year [1] - This decision aligns with the company's ongoing efforts to evolve its product offerings based on consumer preferences, as seen in past changes like removing high-fructose corn syrup from Uncrustables® sandwiches [2][3] Group 2: Leadership Statements - Mark Smucker, CEO, emphasized the company's history of adapting to consumer preferences and the importance of innovation in meeting consumer expectations [2] - John Brase, COO, stated that the decision to remove FD&C colors supports the company's commitment to providing safe, quality, and affordable products [3] Group 3: Company Overview - The J.M. Smucker Co. offers a diverse range of brands across North America, leading in categories such as coffee, peanut butter, and fruit spreads [3] - The company is dedicated to producing quality products and operating responsibly, aiming to grow its business while positively impacting society [3]

Group 1: Market Overview - The relative strength index (RSI) below 30 indicates extreme selling pressure, often signaling a potential buying opportunity for contrarian investors [1] - Three major consumer staples companies are currently showing extremely oversold signals not seen in years, presenting interesting setups for mean reversion [2] Group 2: Molson Coors Beverage Company - Molson Coors Beverage Company has seen its stock price drop over 20% since early April, with an RSI of 19, the lowest since 2018 [3][4] - Analysts have maintained a Buy rating for Molson Coors, with price targets of $65 from Needham & Company and $71 from Roth Capital, indicating nearly 50% upside potential from current levels [4] Group 3: Constellation Brands - Constellation Brands has experienced a 20% decline in the past month, with an RSI of 23, indicating oversold conditions [6][7] - Warren Buffett's Berkshire Hathaway has increased its stake in Constellation Brands to over 6% of available shares, suggesting institutional confidence in the stock [7] Group 4: J.M. Smucker Company - J.M. Smucker Company shares have fallen 15% in just over a week, with an RSI of 29, indicating oversold conditions [9][10] - The stock is currently trading below analyst price targets, with Stifel Nicolaus and Bank of America setting targets at $106 and $105, respectively, while UBS Group has a Buy rating with a $129 target, implying over 30% upside potential [10][11]

Core Insights - The J. M. Smucker Company (SJM) has faced significant challenges in 2025, with its stock down nearly 13% year to date, contrasting with the S&P 500's 1.2% gain and the Zacks Consumer Staples sector's 4.9% growth [1][7] - SJM's stock closed at $95.96, just above its 52-week low of $93.30, and is trading below both its 50-day and 200-day moving averages, indicating ongoing weakness in momentum and investor sentiment [4][5] Financial Performance - SJM's U.S. Retail Pet Foods segment saw a 13% year-over-year decline in net sales, attributed to retailer inventory adjustments and reduced demand in the dog snacks category [8] - The Sweet Baked Snacks segment reported a 26% decline in net sales and a 72% drop in segment profit, driven by unfavorable volume/mix and lower net pricing [10] - The company anticipates a 25% decline in Q1 EPS due to ongoing cost pressures, tariffs, and soft demand [7][16] Cost and Margin Challenges - SJM reported a 9% year-over-year decline in adjusted gross profit in Q4 fiscal 2025, primarily due to elevated costs and unfavorable product mix [12] - The company expects adjusted gross profit margin for fiscal 2026 to range between 35.5% and 36%, impacted by elevated commodity costs and tariffs [13] - Selling, distribution, and administrative expenses are projected to rise approximately 3% year over year, driven by increased marketing investments [14] Future Outlook - For fiscal 2026, SJM anticipates a low-single-digit decline in reported net sales, with comparable net sales expected to remain flat [15][16] - The company faces a complex operating environment characterized by tariff impacts, regulatory changes, and shifting consumer behaviors [15]

Raw Material Costs and Price Management - Raw material costs have fluctuated significantly in 2025, driven by elevated commodity and supply chain costs, necessitating potential price adjustments across the business[18] - The company employs futures and fixed-price contracts to manage price volatility for a significant portion of its commodity costs[18] - A hypothetical 10 percent change in market prices related to commodities could result in potential gains or losses in fair value, but actual losses or gains are actively managed[268][270] - The estimated fair value of commodities for the year ended April 30, 2025, was $112.7 million for high, $49.6 million for average, and $20.0 million for low[269] Customer Concentration and Sales - Sales to Walmart accounted for 33% of net sales in both 2025 and 2024, and 34% in 2023, indicating a strong reliance on major customers[24] - The top 10 customers collectively represented approximately 60% of consolidated net sales in 2025, highlighting the concentration of revenue sources[25] - Revenues from customers outside the U.S. represented 4 percent of consolidated net sales during 2025, indicating exposure to foreign currency fluctuations[273] Employee and Workforce Management - The company has over 8,000 full-time employees worldwide, emphasizing the importance of human capital in its operations[35] - The company provided over 27,000 hours of professional development training for employees in 2025[43] - The company achieved a trailing 12-month turnover rate below the industry average, reflecting its commitment to employee retention[42] - The company offers at least three weeks of paid time off, 12 paid holidays, and 12 weeks of parental leave, supporting employee well-being[51] - The company conducts annual pay equity analysis to ensure fair compensation among similarly situated employees[49] Community Engagement and Philanthropy - The company donated over $10 million to more than 100 philanthropic partners, including local food banks and the American Red Cross[39] - The company coordinated an initiative to increase funding from operational sites to local organizations, enhancing community support[40] Environmental Sustainability - The company is committed to environmental sustainability, with public goals related to waste diversion, water usage, and greenhouse gas emissions[34] Safety and Incident Management - The total recordable incident rate achieved by the company was less than half of the national average for industry peers in 2025[44] Financial Management and Risk - A hypothetical 100 basis-point decrease in interest rates would increase the fair value of the company's long-term debt by $563.6 million as of April 30, 2025[266] - The company terminated interest rate contracts for $42.5 million concurrent with the payment of debt assumed from the acquisition of Hostess Brands[264] - Foreign currency exchange risk is primarily related to Canadian currency, with foreign currency denominated assets and liabilities not expected to significantly impact future earnings or cash flows[271] - The company utilizes foreign currency derivatives with maturities of less than one year to manage exchange rate fluctuations, with changes in value immediately recognized in cost of products sold[272] - The company realized a net loss of $4.5 million from reverse treasury locks during the year ended April 30, 2025[263] Product Segmentation - Private label brands held a 15.2% average market share in the U.S. retail market segments for the 52 weeks ended April 20, 2025, up from 13.7% in the previous year[29] - The Sweet Baked Snacks segment experiences moderate seasonality, with declines during the early winter period due to the holiday season[23]

Core Viewpoint - J.M. Smucker's stock has significantly declined following its fourth-quarter fiscal 2025 results and updated fiscal 2026 guidance, presenting a potential buying opportunity due to its high-yield dividend and attractive valuation [1][2]. Financial Performance - Net sales decreased by 3% year over year in Q4, but increased by 7% for the full fiscal year [4] - Adjusted earnings per share (EPS) rose by 2% to $10.12, with fiscal 2026 guidance expecting net sales growth of 2% to 4% and adjusted EPS to decline to between $8.50 and $9.50 [4] - Free cash flow (FCF) for fiscal 2025 was $816.6 million, covering $455.4 million in dividend payments, with expectations for FCF to rise to $875 million in fiscal 2026 [10][11] Pricing Strategy and Market Conditions - The company is facing record-high green coffee production costs, leading to planned price increases in May and August [5][6] - Price increases have been implemented across various product lines, including Uncrustables, which saw its first price hike in over three years [7] - The Sweet Baked Snacks segment, which includes Hostess, has underperformed, with net sales down 26% year over year [9] Dividend Stability - J.M. Smucker has raised its dividend for 29 consecutive years, with a current yield of 4.6% due to the stock sell-off [11] - The company has a free cash flow yield of 6.5%, indicating strong potential to support its dividend payments [12] Valuation Metrics - The forward price-to-FCF ratio is 11.5, and the forward price-to-earnings ratio is 10.5, suggesting the stock is undervalued compared to historical averages [13][14] - The company's market cap has fallen to $10.05 billion, with the Sweet Baked Snacks segment contributing only 12% of total net sales [9] Investment Opportunity - Despite the challenges, J.M. Smucker continues to generate substantial free cash flow and offers a reliable dividend, making it an attractive investment for the second half of 2025 [19]

Company Overview - JM Smucker (SJM) is an Ohio-based company known for coffee (Folgers) and peanut butter and jelly products [8] - The company acquired Hostess about two years ago [3] Financial Performance & Valuation - The stock was down $16, with 105-106 million shares outstanding [4] - The stock price is $94 [4] - The company has a $1 billion product line that is growing substantially [4] - Current year earnings are projected at $850 million, below street estimates [5] - The company paid $55 billion (55 * 10^9) for the Hostess acquisition [6] - Potential for $12 in earnings if coffee pricing improves, Uncrustables continue to grow, and debt is reduced [6] Challenges & Risks - The company faces headwinds from GLP drugs and other trends [3] - The Hostess acquisition timing was not ideal, and the price was high [6][8] - Cash flow barely covers interest expense related to the acquisition [6] Opportunities & Outlook - Uncrustables (peanut butter and jelly sandwiches) are a key product [1][4][6] - There is an opportunity to reprice their coffee products [6] - Despite a recent misstep, the company has a history of successful ventures [7] - The current stock price presents a buying opportunity for long-term investors [8]

Financial Performance - J. M. Smucker Company reported fourth-quarter earnings of $2.31 per share, exceeding the analyst consensus estimate of $2.24 per share [1] - Quarterly sales were reported at $2.14 billion, which fell short of the analyst consensus estimate of $2.18 billion [1] Management Commentary - CEO Mark Smucker highlighted the demand for the company's leading brands and the resilience of the business, noting improvements in financial position, adjusted earnings per share, and free cash flow [2] - The company invested in its business, paid down debt, and returned cash to shareholders through dividends [2] Future Guidance - For fiscal year 2026, J. M. Smucker forecasts adjusted earnings per share between $8.50 and $9.50, which is below the analyst consensus of $10.26 [2] - The company anticipates net sales growth of 2% to 4% for the upcoming fiscal year [2] Stock Performance and Analyst Ratings - Following the earnings announcement, J. M. Smucker shares increased by 1.8% to trade at $96.11 [3] - Analysts have adjusted their price targets, with Jefferies upgrading the stock from Hold to Buy and lowering the price target from $118 to $115 [8] - Wells Fargo maintained an Overweight rating while lowering the price target from $135 to $115, and B of A Securities maintained a Neutral rating with a price target reduction from $118 to $105 [8]

Vladimir Dimitrov, CFA is a former strategy consultant within the field of brand and intangible assets valuation. During his career in the City of London he has been working with some of the largest global brands within the technology, telecom and banking sectors. He graduated from the London School of Economics and is interested in finding reasonably priced businesses with sustainable long-term competitive advantages.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of t ...

Core Insights - The J. M. Smucker Company (SJM) reported fourth-quarter fiscal 2025 results, with net sales missing estimates while adjusted earnings exceeded expectations, both metrics showing a year-over-year decline [1][3][10] Financial Performance - Adjusted earnings per share (EPS) were $2.31, down 13% year over year, but above the Zacks Consensus Estimate of $2.25 [3][10] - Net sales totaled $2,143.8 million, a 3% decline year over year, missing the Zacks Consensus Estimate of $2,191 million [3][10] - Excluding noncomparable sales from divestitures and currency impacts, net sales decreased by 1%, attributed to a 3% drop in volume/mix, partially offset by a 3% increase in net price realization [3][10] Segment Performance - U.S. Retail Pet Foods: Sales fell 13% to $395.5 million, with an 11-percentage-point negative impact from volume/mix [5] - U.S. Retail Coffee: Sales increased 11% to $738.6 million, driven by a 10% rise in net price realization [6] - U.S. Retail Frozen Handheld and Spreads: Sales decreased slightly to $449.8 million, with a profit drop of 5% to $91 million [7] - Sweet Baked Snacks: Sales were $251 million, down 26% year over year, with a profit decline of 72% to $20 million [8] - International and Away From Home: Sales increased 3% to $308.9 million, with a profit increase of 13% to $69.2 million [9] Financial Health - Cash and cash equivalents stood at $69.9 million, with long-term debt of $7,036.8 million and total shareholders' equity of $6,082.6 million [11] - Operating cash flow was $393.9 million, and free cash flow was $298.9 million for the quarter [11] Future Outlook - For fiscal 2026, SJM anticipates net sales growth of 2-4%, factoring in the impact of recent divestitures [13] - Comparable net sales are expected to rise approximately 3.5-5.5%, driven by higher net price realization, despite volume/mix declines [14] - Adjusted EPS guidance for fiscal 2026 is set between $8.50 and $9.50, down from $10.12 in fiscal 2025 [15]

Core Insights - Smucker (SJM) reported revenue of $2.14 billion for the quarter ended April 2025, reflecting a decrease of 2.8% year-over-year and a surprise of -2.18% compared to the Zacks Consensus Estimate of $2.19 billion [1] - The company's EPS was $2.31, down from $2.66 in the same quarter last year, with an EPS surprise of +2.67% against the consensus estimate of $2.25 [1] Financial Performance Metrics - U.S. Retail Frozen Handheld and Spreads net sales were $449.80 million, slightly below the estimated $462.28 million, marking a year-over-year decline of -0.2% [4] - U.S. Retail Coffee net sales reached $738.60 million, exceeding the average estimate of $715.26 million, with a year-over-year increase of +10.9% [4] - U.S. Retail Pet Foods net sales were $395.50 million, below the estimated $433.66 million, representing a year-over-year decline of -12.6% [4] - International and Away From Home net sales were $308.90 million, slightly below the estimate of $310.83 million, with a year-over-year increase of +3.1% [4] - Sweet Baked Snacks net sales were $251 million, below the estimated $270.36 million, reflecting a significant year-over-year decline of -25.5% [4] Segment Profit Analysis - Segment profit for Sweet Baked Snacks was $20 million, significantly lower than the average estimate of $53.95 million [4] - Segment profit for U.S. Retail Coffee was $211.20 million, exceeding the average estimate of $182.87 million [4] - Corporate administrative expenses were reported at -$75.10 million, better than the average estimate of -$93.98 million [4] - Segment profit for U.S. Retail Frozen Handheld and Spreads was $91 million, slightly below the average estimate of $93.28 million [4] - Segment profit for International and Away From Home was $69.20 million, surpassing the average estimate of $62.50 million [4] - Segment profit for U.S. Retail Pet Foods was $106.10 million, below the average estimate of $115.33 million [4] Stock Performance - Smucker's shares have returned -0.6% over the past month, while the Zacks S&P 500 composite has increased by +6.3% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]