Packaged foods company J.M Smucker (NYSE:SJM) reported results in line with analysts' expectations in Q3 FY2024, with revenue flat year on year at $2.23 billion. It made a non-GAAP profit of $2.48 per share, improving from its profit of $2.21 per share in the same quarter last year.
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J. M. Smucker (SJM) Q3 FY2024 Highlights:
- Revenue: $2.23 billion vs analyst estimates of $2.22 billion (small beat)
- EPS (non-GAAP): $2.48 vs analyst estimates of $2.27 (9.2% beat)
- Guidance for full year EPS (non-GAAP): $9.55 (raised from previous) vs analyst estimates of $9.52 (beat)
- Free Cash Flow of $249.6 million, up from $28.2 million in the previous quarter
- Gross Margin (GAAP): 36.9%, up from 34.1% in the same quarter last year
- Sales Volumes were up 4% year on year
- Market Capitalization: $13.29 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.
Packaged FoodAs 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, prepared meals, 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 GrowthJ. 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.
This quarter, J. M. Smucker grew its revenue by 0.6% year on year, and its $2.23 billion in revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 9.9% over the next 12 months, an acceleration from this quarter.
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.
In J. M. Smucker's Q3 2024, sales volumes jumped 4% year on year. This result was a well-appreciated turnaround from the 4% year-on-year decline it posted 12 months ago, showing the company is heading in the right direction.
Key Takeaways from J. M. Smucker's Q3 Results It was good to see J. M. Smucker beat analysts' EPS expectations this quarter. On the other hand, its gross and operating margins both missed Wall Street's estimates. Guidance was ok, with full year comparable sales growth maintained from previous and full year EPS guidance coming in slightly ahead of expectations and raised from the previous range given. Overall, this was a mixed quarter for J. M. Smucker. The stock is flat after reporting and currently trades at $124.71 per share.