NEW YORK (TheStreet) -- Shares of The J.M. Smucker Co. (SJM) are slipping, down 3.53% to $100.41 in afternoon trading Wednesday, following the branded food products company's lowered full year outlook after seeing its Folgers coffee brand sales decline driven by consumers avoiding higher prices.
The Orville, OH-based company now expects sales to fall 1% for the full year, compared to its earlier forecast of a 3% to 4% growth.
J.M. Smucker also cut its earnings guidance to a range of $5.45 to $5.65 per share for the full year, from its earlier estimate of $5.95 to $6.05 per share.
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 largely solid financial position with reasonable debt levels by most measures and expanding profit margins. 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:
- 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 ($6.00 versus $5.40).
- The current debt-to-equity ratio, 0.46, 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 0.53, displays a potential problem in covering short-term cash needs.
- 39.08% is the gross profit margin for SMUCKER (JM) CO which we consider to be strong. Regardless of SJM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 8.76% trails the industry average.
- SJM, with its decline in revenue, slightly underperformed the industry average of 0.5%. Since the same quarter one year prior, revenues slightly dropped by 2.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, SJM has underperformed the S&P 500 Index, declining 5.43% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
- You can view the full analysis from the report here: SJM Ratings Report