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Investing.com - Argus downgraded J.M. Smucker (NYSE:SJM) from Buy to Hold on Friday, citing volume growth challenges amid economic uncertainty. According to InvestingPro data, the company’s stock is currently trading near its Fair Value, with 14 analysts recently revising their earnings expectations downward for the upcoming period.
The research firm pointed to ongoing struggles with commodity inflation and supply-chain challenges, which the company has attempted to address through price increases and productivity improvements. These price hikes, however, are further pressuring sales volumes. Despite these challenges, InvestingPro data shows the company maintains a modest revenue growth of 2.54% and has impressively maintained dividend payments for 55 consecutive years.
Coffee remains a particular concern for J.M. Smucker, with rising green coffee prices and tariffs weighing on margin growth. The downgrade comes despite some positive developments, including the company’s divestment of slower-growing pet food brands. The company maintains a gross profit margin of 35.36%, though its current ratio of 0.81 indicates some pressure on short-term liquidity.
Argus noted that J.M. Smucker’s acquisition of Hostess Brands represents a strategic focus on the convenience food industry, with the company leveraging cross-promotional events between Hostess and legacy Smucker brands. Management is also working to establish revenue synergies by expanding Uncrustables into convenience stores.
The firm highlighted that SJM shares are trading at 12 times its fiscal year 2027 earnings estimate, below the peer average of 17, which it considers reasonable given the current inflationary environment, consumer caution, and pressures from green coffee prices. For deeper insights into SJM’s valuation and performance metrics, including exclusive ProTips and comprehensive financial analysis, check out the detailed Pro Research Report available on InvestingPro.
In other recent news, J.M. Smucker’s first-quarter fiscal 2026 earnings results have been a focal point for analysts. The company reported earnings per share of $1.90, which slightly beat Stifel’s estimate but fell short of the consensus expectation. Despite stronger-than-expected sales, the company’s gross margins were weaker, leading to a mixed performance. UBS responded by lowering its price target to $121, maintaining a Buy rating, while BofA Securities reduced its target to $118 due to coffee tariffs, keeping a Neutral rating.
DA Davidson raised its price target to $112, maintaining a Neutral stance, even though the results did not meet market expectations. Bernstein increased its target to $110, noting better-than-expected coffee price elasticity and an increase in free cash flow guidance by $100 million due to anticipated tax benefits. Stifel maintained its $110 price target, highlighting the resilience in the company’s coffee business volumes. These developments reflect a diverse range of analyst perspectives on J.M. Smucker’s recent financial performance and future outlook.
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