J. M. Smucker (NYSE:SJM) Misses Q1 Revenue Estimates

Jabin Bastian /
2024/06/06 7:16 am EDT

Packaged foods company J.M Smucker (NYSE:SJM) fell short of analysts' expectations in Q1 CY2024, with revenue down 1.3% year on year to $2.21 billion. Its non-GAAP profit of $2.66 per share was flat year on year.

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J. M. Smucker (SJM) Q1 CY2024 Highlights:

  • Revenue: $2.21 billion vs analyst estimates of $2.24 billion (1.7% miss)
  • EPS (non-GAAP): $2.66 vs analyst estimates of $2.33 (14.2% beat)
  • Gross Margin (GAAP): 41.4%, up from 35.5% in the same quarter last year
  • Free Cash Flow of $297.5 million, up 19.2% from the previous quarter
  • Sales Volumes rose 1% year on year
  • (0% in the same quarter last year)
  • Market Capitalization: $11.71 billion

Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span peanut butter to coffee to pet food.

Shelf-Stable Food

As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.

Sales Growth

J. M. Smucker is one of the larger consumer staples companies and benefits from a well-known brand, giving it customer mindshare and influence over purchasing decisions.

As you can see below, the company's revenue was flat over the last three years. This is poor for a consumer staples business.

J. M. Smucker Total Revenue

This quarter, J. M. Smucker missed Wall Street's estimates and reported a rather uninspiring 1.3% year-on-year revenue decline, generating $2.21 billion in revenue. Looking ahead, Wall Street expects sales to grow 10.2% over the next 12 months, an acceleration from this quarter.

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Volume Growth

Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.

J. M. Smucker's quarterly sales volumes have, on average, stayed about the same over the last two years. This stability is normal because the quantity demanded for consumer staples products typically doesn't see much volatility.

J. M. Smucker Year-On-Year Volume Growth

In J. M. Smucker's Q1 2024, year on year sales volumes were flat.

Key Takeaways from J. M. Smucker's Q1 Results

We were impressed by how significantly J. M. Smucker blew past analysts' gross margin expectations this quarter. We were also glad its EPS outperformed Wall Street's estimates. On the other hand, its revenue unfortunately missed analysts' expectations and its operating margin missed Wall Street's estimates. Zooming out, we think this was still a decent, albeit mixed, quarter, showing that the company is staying on track. The stock is up 2% after reporting and currently trades at $112.50 per share.

So should you invest in J. M. Smucker right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.