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JM Smucker Co - Stock Quote SJM

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Morningstar's JM Smucker Co Stock Analysis

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No-Moat Smucker Struggling to Stabilize Dog Food Sales; Shares Modestly Undervalued

Analyst Note

| Rebecca Scheuneman, CFA |

Smucker released lukewarm results for its January-ended fiscal 2022 third quarter, with organic sales growth of 4%, driven by a 6% contribution from price, partially offset by a 2% drop in volume/mix. The volume decline was driven by ongoing weakness in Smucker’s dog food business. Despite significant investment, Smucker has not successfully stabilized the Nutrish dog food brand. Until the problem is resolved, we are glad to see management redirect production and marketing investments toward products that are resonating with consumers, such as Meow Mix cat food, Uncrustables (on pace for $1 billion in sales by 2027, from $500 million in the most recent 12 months), and coffee, which we think will continue to benefit from a shift to at-home consumption (which currently stands at 70%, up from the prepandemic 67%) with flexible work arrangements exhibiting staying power.

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JM Smucker Co's Company Profile

Business Description

J.M. Smucker is a packaged food company that primarily operates in the U.S. retail channel (88% of fiscal 2021 revenue), but also in U.S. food-service (5%), and international (7%). Its largest segment is pet food and treats (36% of 2021 revenue), with popular brands such as Milk-Bone, Meow Mix, 9Lives, Kibbles 'n Bits, Nature's Recipe, and Rachael Ray Nutrish. Its second- largest category is coffee (33% across channels) with the number-two brand Folgers and number-six Dunkin'. Other large categories are peanut butter (10%), with number-one Jif, fruit spreads (5%) with number-one Smucker's, and frozen hand-held foods (5%) with number-one Uncrustables.

One Strawberry Lane
Orrville, OH, 44667-0280
T +1 330 682-3000
Sector Consumer Defensive
Industry Packaged Foods
Most Recent Earnings Jan 31, 2022
Fiscal Year End Apr 30, 2022
Stock Type Slow Growth
Employees 7,100

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