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.
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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