Rich Smith, The Motley Fool
3 min read
In This Article:
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J.M. Smucker reported an earnings beat but a sales miss this morning.
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Management also forecast weaker-than-expected fiscal 2026 earnings, but improved free cash flow.
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Smucker stock sells in the mid-teens for valuation, and pays a 3.9% dividend yield.
Jam magnate J.M. Smucker (NYSE: SJM) got squashed on Tuesday, its share price tumbling 12.7% through noon ET, after reporting mixed earnings this morning.
Heading into the company's fiscal Q4 2025 report, analysts expected the foods company to earn $2.25 per share, adjusted for one-time items, on sales of $2.2 billion. Smucker beat the earnings target handily, reporting $2.31, but missed on sales, which were only $2.1 billion.
Not all the news was bad. Q4 sales declined 3% year over year, but only 1% "adjusted" to reflect divestitures of the company's Sahale Snacks, Canadian condiments, and Voortman businesses, as well as foreign currency rate fluctuations. But the bad news was... pretty bad.
Adjusted earnings for the quarter declined 13% year over year, and Smucker reported a $6.85-per-share net loss, as calculated according to generally accepted accounting principles (GAAP). So Smucker didn't just earn less money; it actually lost money.
Indeed, for full-year fiscal 2025, Smucker reported a net loss of $11.57 per share on sales that declined 13%.
And yet, all bad things must come to an end, and things may be looking up for Smucker as we move into the company's fiscal 2026. Management forecasts a return to sales growth of 2% to 4% this year, with adjusted earnings between $8.50 and $9.50, and positive free cash flow (FCF) of $875 million.
If Smucker hits that mark, it would mean year-over-year FCF growth roughly twice as good as sales growth -- about 7% -- and give the stock an unchallenging price-to-free cash flow ratio of only 13.6. Factor in a 3.9% dividend yield and a high-single-digit growth rate, and J.M. Smucker might be getting close to cheap enough to buy.
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