Argus Downgrades J.M. Smucker To Hold, Cites Margin Pressures And Coffee Costs

Core Viewpoint - Argus downgraded J.M. Smucker from Buy to Hold due to ongoing struggles with volume growth and economic uncertainty impacting sales [1] Group 1: Financial Performance - J.M. Smucker is facing challenges with volume growth amid economic uncertainty, leading to price increases that are not sufficiently offsetting commodity inflation [1] - Rising green coffee prices and tariffs are exerting additional pressure on the company's margins [1] - Smucker shares are trading at 12 times projected FY27 EPS, which is lower than the peer average of 17, indicating a reasonable valuation under current inflationary conditions and weak coffee margins [3] Group 2: Strategic Initiatives - The divestiture of slower-growth pet food brands and the acquisition of Hostess Brands are seen as positive moves that could enhance cross-promotional efforts with Smucker's existing portfolio [2] - The company is expanding its Uncrustables brand into convenience stores as part of a revenue synergy strategy [2] Group 3: Future Outlook - Argus indicated that an upgrade could be considered if there are signs of sustainable margin and volume growth in the future [3]