Will This Upgrade Help J.M. Smucker (SJM) Stock On Monday?

NEW YORK (TheStreet) -- The J.M. Smucker Company (SJM) was upgraded to "market perform" from "underperform" at Wells Fargo (WFC) today.

The firm said it raised its rating on the food company as it believes branded M&A potential might drive growth in upcoming quarters.

Wells Fargo raised its price target on the company to $102-$104 from $90-$92.

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Separately, TheStreet Ratings team rates SMUCKER (JM) CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate SMUCKER (JM) CO (SJM) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 38.94% is the gross profit margin for SMUCKER (JM) CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.60% is above that of the industry average.
  • Net operating cash flow has significantly increased by 55.02% to $266.90 million when compared to the same quarter last year. In addition, SMUCKER (JM) CO has also vastly surpassed the industry average cash flow growth rate of -18.05%.
  • SMUCKER (JM) CO' earnings per share from the most recent quarter came in slightly below the year earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SMUCKER (JM) CO increased its bottom line by earning $5.40 versus $5.00 in the prior year. This year, the market expects an improvement in earnings ($6.01 versus $5.40).
  • The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that SJM's debt-to-equity ratio is low, the quick ratio, which is currently 0.52, displays a potential problem in covering short-term cash needs.
  • SJM, with its decline in revenue, underperformed when compared the industry average of 3.7%. Since the same quarter one year prior, revenues slightly dropped by 7.9%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: SJM Ratings Report
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