Long-established in the Consumer Packaged Goods industry, JM Smucker Co (SJM, Financial) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 0%, juxtaposed with a three-month change of -15.83%. However, fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of JM Smucker Co.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 6/10
- Profitability rank: 7/10
- Growth rank: 4/10
- GF Value rank: 9/10
- Momentum rank: 1/10
Based on the above method, GuruFocus assigned JM Smucker Co a GF Score of 69 out of 100, which signals poor future outperformance potential.
Understanding JM Smucker Co Business
With a market cap of $12.49 billion and sales of $8.19 billion, JM Smucker Co operates with a 16.04% operating margin. The company, primarily known for its retail presence in the U.S. (84% of fiscal 2024 forecast revenue), has a diversified portfolio. After divesting several pet foods brands and private-label products, retail coffee, including Folgers and Dunkin', has become its largest category, accounting for around 36% of fiscal 2024 sales. Pet foods, with leading brands like Milk-Bone and Meow Mix, contribute about 23% of sales. The remaining 25% comes from consumer foods, with Jif and Smucker's as the flagship brands. The anticipated acquisition of Hostess Brands is set to further expand JM Smucker Co's market presence.
Growth Prospects
A lack of significant growth is another area where JM Smucker Co seems to falter, as evidenced by the company's low Growth rank. Over the past five years, JM Smucker Co has witnessed a decline in its earnings before interest, taxes, depreciation, and amortization (EBITDA). The three-year growth rate is recorded at -28.3, while the five-year growth rate is at -10.5. These figures underscore potential challenges in the company's profitability. Lastly, JM Smucker Co's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Next Steps
Considering JM Smucker Co's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While the company has a strong history and brand recognition, the current financial indicators suggest that investors should proceed with caution. The low growth and momentum ranks, in particular, may signal a challenging road ahead for the company. Value investors may want to keep an eye on these metrics and consider the broader market context when evaluating JM Smucker Co's future prospects.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
