J. M. Smucker Co. reported better-than-expected 2Q results, as the packaged food manufacturer benefited from higher demand for consumer foods and coffee amid the coronavirus pandemic. The company also raised its guidance for fiscal 2021.
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Smucker’ (SJM) 2Q earnings of $2.39 topped the Street’s estimates of $2.23 and jumped 6% year-over-year. Revenues grew 4% to $2.03 billion and surpassed analysts’ expectations of $2.01 billion.
The company’s CEO Mark Smucker said “In the second quarter, we focused on meeting the demands created by the current environment, while continuing to execute our long-term strategy to deliver sustainable growth.” He added that “Our U.S. Retail Consumer Foods and U.S. Retail Coffee businesses experienced strong sales momentum from elevated at-home consumption trends and grew market share.”
As for fiscal 2021, the company raised its adjusted EPS guidance range to $8.55 to $8.85, up from its earlier guidance of $8.20 to $8.60. Analysts’ consensus estimates stand at $8.64 per share. The company projects fiscal 2021 sales to grow by 1% to 2%, compared to the prior guidance of flat to up 1%. (See SJM stock analysis on TipRanks)
Despite the robust 2Q results, Jefferies analyst Robert Dickerson maintained a Hold rating and a price target of $127 (7.8% upside potential) on the stock, given “margin risk into next fiscal year.” The analyst sees “near-term brand building needs, higher trade spend, lower fixed cost absorption, and inflating freight and transportation costs, all combined with a potentially more normalized forthcoming promotional environment.”
Like Dickerson, the Street is also sidelined on the stock. The Hold analyst consensus is based on 8 Holds and 1 Sell. The average price target of $121.67 implies upside potential of about 3.3% to current levels. Shares have gained 13.1% year-to-date.
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