Consider This Before Taking a Position in J.M. Smucker (SJM)

Now trading at a price of $155.74, J.M. Smucker has moved -1.2% so far today. In contrast, the S&P 500 index moved -1.0%. Read below for a basic value analysis of J.M. Smucker.

J.M. Smucker shares moved 14.9% over the last 52 weeks, with a high of $163.07 and a low of $119.82. During this time, the stock outperformed the S&P 500 index by 23.0%. As of January 2022, the company's 50-day average price is $151.0. The J. M. Smucker Company manufactures and markets branded food and beverage products worldwide. The large-cap Consumer Staples company has 6,700 full time employees and is based in Orrville, OH. J.M. Smucker has returned a 2.6% dividend yield over the last 12 months.

EPS Trend Sustained Primarily by Reducing the Number of Shares Outstanding with Reasonable Leverage Levels:

2019-04-30 2020-04-30 2021-04-30 2022-04-30
Revenue (MM) $7,838 $7,801 $8,003 $7,999
Revenue Growth n/a -0.47% 2.59% -0.05%
Gross Margins 37.2% 38.5% 39.2% 33.8%
Gross Margins Growth n/a 3.49% 1.82% -13.78%
Operating Margins 15.3% 16.6% 17.6% 14.8%
Operating Margins Growth n/a 8.5% 6.02% -15.91%
Net Margins 6.56% 9.99% 10.95% 7.9%
Net Margins Growth n/a 52.29% 9.61% -27.85%
Earnings Per Share $4.52 $6.84 $7.79 $6.64
EPS Growth n/a 51.33% 13.89% -14.76%
Diluted Shares (MM) 114 114 112 107
Free Cash Flow (MM) $781 $986 $1,258 $719
FCF Growth n/a 26.12% 27.68% -42.88%
Capital Expenditures (MM) -$360 -$269 -$307 -$418
Net Debt / EBITDA 3.58 3.02 2.42 2.66

J.M. Smucker Is Reasonably Valued:

Compared to the Consumer Staples sector's average of 24.36, J.M. Smucker has a trailing twelve month P/E ratio of 23.5 and, according to its EPS guidance of 9.48, an expected P/E ratio of 16.4. J.M. Smucker's PEG ratio is 1.01 based on its 15.9% compound average growth rate of historical and projected earnings per share. This implies that the company's shares are fairly valued.

Furthermore, J.M. Smucker is likely undervalued in terms of its equity because its P/B ratio is 2.0 compared to its sector average of 4.29. The company's shares are currently trading 46.2% above their fair value as expressed by Benjamin Graham's formula:

√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 6.45 * 78.164) = $106.51

J.M. Smucker Is the Subject of Mixed Market Indicators:

11 analysts are following J.M. Smucker and have set target prices ranging from $128.0 to $170.0 per share. On average, they have given the company a rating of hold. At the current price of $155.74, SJM is trading 2.52% away from its average analyst target price of $151.91 per share, implying an analyst consensus of little upside potential for the stock.

The company has an average amount of shares sold short since 4.0% of the company's shares are tied to short positions. Institutions own 83.2% of J.M. Smucker's shares, while the insider ownership rate stands at 4.4%. The biggest shareholder is the Vanguard Group, Inc. with a 12% stake in the company worth approximately $2,038,291,396.

The above analysis is intended for educational purposes only and was performed on the basis of publicly available data. It is not to be construed as a recommendation to buy or sell any security. Any buy, sell, or other recommendations mentioned in the article are direct quotations of consensus recommendations from the analysts covering the stock, and do not represent the opinions of Market Inference or its writers. Past performance, accounting data, and inferences about market position and corporate valuation are not reliable indicators of future price movements. Market Inference does not provide financial advice. Investors should conduct their own review and analysis of any company of interest before making an investment decision.