Long-established in the Consumer Packaged Goods industry, JM Smucker Co (SJM, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 1.35%, juxtaposed with a three-month change of 7.51%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of JM Smucker Co.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 7/10
- Growth rank: 4/10
- GF Value rank: 9/10
- Momentum rank: 1/10
Based on the above method, GuruFocus assigned JM Smucker Co a GF Score of 67 out of 100, which signals poor future outperformance potential.
Understanding JM Smucker Co Business
JM Smucker Co, with a market cap of $12.85 billion and sales of $8.18 billion, operates primarily in the US retail channel, which accounts for 78% of its fiscal 2024 revenue. Its portfolio includes retail pet foods, coffee, and frozen handheld/spreads segments. The retail coffee category, featuring brands like Folgers and Dunkin', is its largest at 33% of sales. Pet foods contribute 22% of sales with leading brands like Milk-Bone and Meow Mix. Approximately 22% of its revenue comes from consumer foods, primarily peanut butter and jelly, through brands Jif and Smucker's. The recent acquisition of Hostess Brands in fiscal 2024 aims to boost its snack and convenience store presence.
Financial Strength Breakdown
JM Smucker Co's financial strength indicators present some concerning insights about the company's balance sheet health. The company's Altman Z-Score is just 1.27, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.01 indicates a struggle in handling existing debt levels. Furthermore, the company's debt-to-Ebitda ratio is 5.05, which is above Joel Tillinghast's warning level of 4 and is worse than 77.03% of 1450 companies in the Consumer Packaged Goods industry.
Growth Prospects
A lack of significant growth is another area where JM Smucker Co seems to falter, as evidenced by the company's low Growth rank. Additionally, JM Smucker Co's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Considering JM Smucker Co's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors seeking more robust investment opportunities may consider exploring other companies with stronger GF Scores. For more insights, GuruFocus Premium members can use the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
