Seeking Alpha
Research analyst, growth, value, IPOs
Profile| Send Message|
( followers)  

Investors behind J.M. Smucker (NYSE:SJM) awoke to a pleasant surprise along with their cup of Folgers coffee this morning. J.M. Smucker, the company behind great American brands like Jif, Smuckers, and Folgers, saw its shares hit an all time high today after reporting first quarter earnings for fiscal 2013. Shares hit $83 today, trading on strong volume. The new share price has the company valued at over $9 billion. Prior to today, $81.97 was the highest closing price in the last 52 weeks, and in the history of J.M. Smucker shares.

For the first fiscal quarter, J.M. Smucker saw sales rise 15% to $181 million. Non-GAAP earnings per share came in at $1.17, representing a 4% increase from last year's first quarter. Quarterly cash flow was $167 million. Here is a look at sales by segment:

· United States Retail Coffee: +4%

· Consumer Foods: +15%

· International/Foodservice/Natural Foods: +40%

Here is a look at J.M. Smucker's popular brands :

· Folgers: #1 in coffee

· Crisco: #1 in shortening and oils

· Pillsbury: #2 in dessert baking mixes

· Jif: #1 in peanut butter

· Smuckers: #1 in fruit spreads

As you can see, J.M. Smucker enjoys dominant #1 and #2 market positions in several consumer product categories. In fact, the company's goal is to make acquisitions and release new products to have market leading positions in its food categories.

Recent acquisitions include: Café Bustelo, Folgers, Douwe Egberts, Pilon, and Pickwick. The Douwe Egbert acquisition from Sara Lee gives Smuckers a new large position in the United States Foodservice segment. The Folgers acquisition gave J.M. Smucker the number one position in coffee, and now accounts for over 40% of the company's annual sales.

The J.M. Smucker company released 50 new products during fiscal 2012, and expects to release over 80 new products during this fiscal year. New product offerings from the Pillsbury baking line helped the brand achieve the number two market share position after being number three the previous year.

Coffee continues to be the company's main focus going forward. The company has seen expanded sales from K-Cups -- the individual-serving cups typically used with the popular Keurig coffee brewing machine -- in the coffee market. Folgers dominates the K-Cups with three of the top 10 positions (as of January 2012). The company also has three of the top 10 K-Cups in the premium segment with its licensed Dunkin' Donuts (NASDAQ:DNKN) brand. The Dunkin' Donuts brand is also one of the company's key growth plans. The segment saw sales of $350 million in the last fiscal year, representing 15% of its coffee sales.

J.M. Smucker recently raised its quarterly dividend by 8%. The company has paid out a dividend every year since 1959. With a current quarterly dividend of $0.52, shares now yield over 2.7%.

In the second quarter, analysts are projecting earnings per share of $1.41, and expect to see the company report $1.60 billion in net sales for the quarter. For fiscal 2013, analysts see the company earning $5.10 per share on $5.89 billion in sales. J.M. Smucker is calling for net sales to increase 7% for the fiscal year, representing $5.92 billion in annual sales. The company sees earnings per share of $5.00 to $5.10 for the fiscal year.

Looking at the shares on a price to earnings valuation, shares now trade at 16.3 times this year's earnings and 14.9 times next year's expected earnings ($5.58). With the company having closed on several recent acquisitions, shares are shaping up nicely to continue their run. The acquisition of Folgers transformed the company from a fruit spreads and peanut butter brand to a coffee powerhouse. With dominant number one and two positions in several major categories, J.M. Smucker's sales or earnings growth is not likely to drop anytime soon.

Source: The Best Part Of Waking Up Could Have Been J.M. Smucker In Your Portfolio