With a daily loss of -8.11%, a 3-month loss of -13.81%, and a reported Loss Per Share of 0.16, JM Smucker Co (SJM, Financial) finds itself in an intriguing position. The question arises: is the stock modestly undervalued? This article aims to provide a comprehensive analysis of JM Smucker Co's valuation, encouraging readers to delve into the subsequent sections for a detailed understanding.
Company Introduction
JM Smucker Co, a packaged food company, primarily sells through the U.S. retail channel, with the remaining share split between foodservice and international markets. The company holds leading brands like Folgers, Dunkin', Milk-Bone, and Meow Mix. Comparing the stock price of $130.1 per share and the GF Value of $146.59, it seems that JM Smucker Co might be modestly undervalued.
Understanding the GF Value
The GF Value is a proprietary measure of a stock's intrinsic value, calculated based on historical multiples, GuruFocus adjustment factor, and future business performance estimates. The GF Value Line provides an overview of the fair value that the stock should be traded at. If the stock price is significantly above or below the GF Value Line, it indicates that the stock may be overvalued or undervalued, respectively.
JM Smucker Co, with its current price of $130.1 per share and a market cap of $13.30 billion, appears to be modestly undervalued according to the GF Value. As the stock is relatively undervalued, the long-term return of its stock is likely to be higher than its business growth.
Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss. To avoid this, it's crucial to review a company's financial strength before deciding to purchase shares. JM Smucker Co's cash-to-debt ratio of 0.16 ranks worse than 69.77% of 1793 companies in the Consumer Packaged Goods industry, indicating a fair financial strength of 6 out of 10.
Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. JM Smucker Co's profitability has been fair over the past 10 years. The company's operating margin of 15.4% ranks better than 85.97% of 1810 companies in the Consumer Packaged Goods industry. However, the 3-year average annual revenue growth of JM Smucker Co is 5.3%, which ranks worse than 53.73% of 1714 companies in the same industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. Over the past 12 months, JM Smucker Co's ROIC was -1.87, while its WACC came in at 5.24.
Conclusion
In conclusion, JM Smucker Co (SJM, Financial) appears to be modestly undervalued. The company's financial condition is fair, and its profitability is fair. Its growth ranks worse than 90.65% of 1518 companies in the Consumer Packaged Goods industry. For more details about JM Smucker Co stock, check out its 30-Year Financials here.
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