SJM: JM Smucker Co Stock Analysis

The JM Smucker Company (SJM:NYSE) is a manufacturer of consumer goods such as food

and beverage as well as pet snacks.
It has 4 segments namely US Retail Coffee, US Retail Consumer Foods, US Pet Foods and
International Foodservice and Natural Gods.
Its principal consumer food and beverage products are coffee, peanut butter, fruit spreads, bakes,
frostings, canned milk, flour, baking ingredients, syrups, picks, grain products and nut mix
products. Pet products comprise dog and cat food.
Analysis of Results
The JM Smucker Company announced results for the fourth quarter ending April 30, 2016and
net sales rose 25% in the 4th quarter due to incremental contribution from the pet brands. Net
sales adjusted for non comparable items rose to 5 percent.
Net income per diluted share rose to USD 1.61 in Q4 indicating non cash deferred tac benefit of
USD 50.5 million or USD 0.42 per share. This is against a net loss per diluted share of USD 0.82
in the prior year impacted by finance activities and purchase accounting adjustments.
Non GAAP income per diluted share was USD 1.86 for Q4 as against 0.41 for Q4, 2015. For the
complete year, non GAAP income per diluted share was USD 6.57 and current year measures
include USD 0.42 per share deferred tax benefit.
Cash associated with operating activities was USD 335.5 million in Q$ compared to 221.6
million in Q4 of 2015. Fiscal 2017 net sales and earning outlook were also provided with net
sales expected to fall i percent. Adjusted non GAAP income per diluted share was roughly in the
range of 7.60 to 7.75.
The JM Smucker Company breaks its business into coffee, consumer foods, international and
pet foods. Consumer foods saw a decline and profit rose from milk business sale primarily.
Coffee did extremely well with Smucker's licensing agreement with Dunkin Donuts brand to sell
consumer coffee. This has been a growth leader and coffee has contributed maximum to the
company's growth.
The company also purchased Big Heart Pet Brands for USD 5.8 billion in cash and stock in
March 2015. The deal has generated sales and profits. This indicates the company has an ability
to adapt and grow, despite a stagnant food segment.
Conclusion

All in all, the JM Smucker Company is associated with steady returns in some segments and no
growth in the consumer or core food segment. Therefore, the stock is a moderate HOLD with
potential for growth that can only be realised as it expands and grows further with an emphasis
on even growth.
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