J. M. Smucker (SJM)

Packaged foods company J.M Smucker (NYSE:SJM) met Wall Street’s revenue expectations in Q2 CY2025, but sales were flat year on year at $2.11 billion. Its non-GAAP profit of $1.90 per share was 1.4% below analysts’ consensus estimates.

Company Overview

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

Competitors in packaged food with diverse brand portfolios include Mondelez (NASDAQ:MDLZ), Campbell Soup (NYSE:CPB), General Mills (NYSE:GIS), and Nestle (SWX:NESN).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $8.71 billion in revenue over the past 12 months, J. M. Smucker is one of the larger consumer staples companies and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because it’s harder to find incremental growth when your existing brands have penetrated most of the market. For J. M. Smucker to boost its sales, it likely needs to adjust its prices, launch new offerings, or lean into foreign markets.

As you can see below, J. M. Smucker’s sales grew at a sluggish 2.8% compounded annual growth rate over the last three years. This shows it failed to generate demand in any major way and is a rough starting point for our analysis.

This quarter, J. M. Smucker’s $2.11 billion of revenue was flat year on year and in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.1% over the next 12 months, similar to its three-year rate. Although this projection indicates its newer products will catalyze better top-line performance, it is still below the sector average.

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.

To analyze whether J. M. Smucker generated its growth from changes in price or volume, we can compare its volume growth to its organic revenue growth, which excludes non-fundamental impacts on company financials like mergers and currency fluctuations.

Over the last two years, J. M. Smucker’s quarterly sales volumes have, on average, stayed about the same. This stability is normal as the quantity demanded for consumer staples products typically doesn’t see much volatility. The company’s flat volumes also indicate its average organic revenue growth of 2.3% was generated from price increases.

In J. M. Smucker’s Q2 2026, sales volumes dropped 4% year on year. This result represents a further deceleration from its historical levels, showing the business is struggling to move its products.

J. M. Smucker has good unit economics for a consumer staples company, giving it the opportunity to invest in areas such as marketing and talent to stay competitive. As you can see below, it averaged an impressive 36.8% gross margin over the last two years. Said differently, J. M. Smucker paid its suppliers $63.21 for every $100 in revenue.

J. M. Smucker’s gross profit margin came in at 22.5% this quarter, down 15.3 percentage points year on year and falling way short of analysts’ estimates. J. M. Smucker’s full-year margin has also been trending down over the past 12 months, decreasing by 3.2 percentage points. If this move continues, it could suggest a more competitive environment with some pressure to lower prices and higher input costs (such as raw materials and manufacturing expenses).

Operating margin is an important measure of profitability accounting for key expenses such as marketing and advertising, IT systems, wages, and other administrative costs.

J. M. Smucker was profitable over the last two years but held back by its large cost base. Its average operating margin of 2.2% was weak for a consumer staples business. This result is surprising given its high gross margin as a starting point.

Looking at the trend in its profitability, J. M. Smucker’s operating margin decreased by 27.1 percentage points over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. J. M. Smucker’s performance was poor no matter how you look at it - it shows that costs were rising and it couldn’t pass them onto its customers.

This quarter, J. M. Smucker generated an operating margin profit margin of 2.2%, down 14.3 percentage points year on year. Since J. M. Smucker’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, and administrative overhead expenses.

We track the change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

In Q2, J. M. Smucker reported adjusted EPS of $1.90, down from $2.44 in the same quarter last year. This print slightly missed analysts’ estimates. Over the next 12 months, Wall Street expects J. M. Smucker’s full-year EPS of $9.58 to shrink by 1.7%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

J. M. Smucker has shown impressive cash profitability, driven by its attractive business model that gives it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.5% over the last two years, better than the broader consumer staples sector. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.

J. M. Smucker burned through $94.9 million of cash in Q2, equivalent to a negative 4.5% margin. The company’s cash flow turned negative after being positive in the same quarter last year. This warrants extra attention because consumer staples companies typically produce more consistent and defensive performance.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

J. M. Smucker historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 2.3%, lower than the typical cost of capital (how much it costs to raise money) for consumer staples companies.

J. M. Smucker reported $39.3 million of cash and $7.99 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.77 billion of EBITDA over the last 12 months, we view J. M. Smucker’s 4.5× net-debt-to-EBITDA ratio as safe. We also see its $388.5 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We struggled to find many positives in these results. Its EBITDA missed and its gross margin fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 4.9% to $105 immediately following the results.

Updated: November 11, 2025 at 10:02 PM EST

Before making an investment decision, investors should account for J. M. Smucker’s business fundamentals and valuation in addition to what happened in the latest quarter.

We cheer for all companies serving everyday consumers, but in the case of J. M. Smucker, we’ll be cheering from the sidelines. First off, its revenue growth was uninspiring over the last three years. And while its favorable brand awareness gives it meaningful influence over consumers’ dining decisions, the downside is its declining operating margin shows the business has become less efficient. On top of that, its relatively low ROIC suggests management has struggled to find compelling investment opportunities.

J. M. Smucker’s P/E ratio based on the next 12 months is 11.5x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $116.88 on the company (compared to the current share price of $108.53).