What Happened?
Shares of packaged foods company J.M Smucker (NYSE: SJM) fell 3.7% in the morning session after the company reported disappointing second-quarter financial results that missed analyst expectations on profit.
For the quarter, net sales were flat year-over-year at $2.11 billion, which met Wall Street estimates. However, adjusted earnings per share came in at $1.90, missing consensus estimates and marking a 22% decrease from the prior year. The company's profitability was significantly challenged, with the gross profit margin dropping by roughly 40% and the operating margin falling by nearly 87%, driven by higher input costs. Adding to the concerns, sales volumes fell 4% year-on-year, indicating the business struggled to move its products. Overall, it was a weak quarter for the company, with misses on key metrics like adjusted earnings and EBITDA.
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What Is The Market Telling Us
J. M. Smucker’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago when the stock dropped 14.3% on the news that the company reported underwhelming first-quarter 2025 results: its full-year EPS guidance missed, and its revenue fell short of Wall Street's estimates.
The weak top line reflected soft demand for dog snacks, sweet baked goods, fruit spreads and lower contract manufacturing sales related to the divested pet food brands.
On the other hand, J. M. Smucker beat analysts' gross margin expectations and its EPS and EBITDA outperformed. Full-year 2026 guidance also called for a 3% growth at the midpoint, which is a deceleration from the 7% growth in the previous year. Overall, this was a weaker quarter.
J. M. Smucker is down 5.5% since the beginning of the year, and at $105.25 per share, it is trading 13.5% below its 52-week high of $121.73 from October 2024. Investors who bought $1,000 worth of J. M. Smucker’s shares 5 years ago would now be looking at an investment worth $870.41.
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