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 0.74%, juxtaposed with a three-month change of -14.91%. 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: 7/10
- Momentum rank: 1/10
Based on the above method, GuruFocus assigned JM Smucker Co a GF Score of 68 out of 100, which signals poor future outperformance potential.
Understanding JM Smucker Co Business
With a market cap of $12.76 billion and sales of $8.19 billion, JM Smucker Co operates with a solid operating margin of 16.04%. The company, primarily known for its retail presence in the U.S., which constitutes 77% of its forecast fiscal 2024 revenue, has recently diversified its portfolio. After divesting several pet foods brands and private-label products, retail coffee has emerged as its largest category, with brands like Folgers and Dunkin'. Pet foods, with leading brands such as Milk-Bone and Meow Mix, account for 22% of sales. The acquisition of Hostess Brands in fiscal 2024 aims to boost JM Smucker Co's snack and convenience store presence, further diversifying its revenue streams.
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 robust history and a diversified product portfolio, the current financial indicators and growth trajectory suggest that investors should proceed with caution. Those seeking to invest in companies with stronger growth potential and more stable financials might want to explore other options. 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.
