On Wednesday, Jefferies adjusted its view on J.M. Smucker (NYSE: SJM), reducing the company's price target to $120 from the previous $121 while maintaining a Hold rating on the stock. The revision comes in response to a lower fiscal year 2025 guidance, which reflects challenges in several product categories.
The firm pointed to a combination of factors contributing to the tempered expectations for J.M. Smucker. Notably, the company experienced a downturn in its stock performance today due to softer sales in the sweet baked snack and pet snack categories. Additionally, there are lowered expectations for coffee volume and profit, which are being impacted by the dynamics of cost pass-through to consumers.
Market trends such as weaker convenience store traffic and a reduction in discretionary spending have negatively affected the sales of baked snacks and pet treats. Furthermore, rising coffee costs are putting pressure on the company's profit margins. Despite these headwinds, products such as Uncrustables, Bustelo, and Meow Mix continue to perform strongly.
In other recent news, J.M. Smucker reported a 10% year-over-year increase in adjusted earnings per share (EPS) for the first quarter, reaching $2.44 and surpassing the consensus estimate of $2.17. However, the company's revenue of $2,125 million, marking an 18% year-over-year growth, fell short of expectations by $9 million. CFRA adjusted J.M. Smucker's stock price target from $131.00 to $128.00, while maintaining a Hold rating. In contrast, DA Davidson and Citi retained their Neutral and Buy ratings respectively.
J.M. Smucker is also reportedly exploring the sale of its Voortman Bakery brand, which could potentially exceed a valuation of $350 million, with Goldman Sachs (NYSE:GS) facilitating the process. The company has adjusted its executive compensation program, shifting performance targets from return on invested capital to average net sales growth.
InvestingPro Insights
In light of Jefferies' recent price target adjustment for J.M. Smucker (NYSE: SJM), it's pertinent to consider additional financial metrics and insights from InvestingPro. As of the last twelve months leading up to Q4 2024, J.M. Smucker boasts a market capitalization of $12.23 billion and a P/E ratio of 13.75, indicating a valuation that might appeal to value-oriented investors. The company's commitment to shareholder returns is evidenced by its impressive track record of raising dividends for 14 consecutive years and maintaining dividend payments for 54 years, with a current dividend yield of 3.58%.
However, it's important to note that short-term obligations exceed liquid assets, which could be a point of concern for liquidity-focused investors. Despite a slight revenue decline of 4.11% over the last twelve months, J.M. Smucker remains profitable with a robust gross profit margin of 38.13%. Analysts predict the company will continue to be profitable this year.
For those considering an investment in J.M. Smucker, it's worth exploring the additional 9 InvestingPro Tips available at https://www.investing.com/pro/SJM, which provide deeper insights into the company's financial health and future prospects.
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