With a name like Smucker, the stock's got to be good

Before you go, we thought you'd like these...
Before you go close icon
Cash-strapped consumers are eating more meals at home and that's slathering J.M. Smucker's (SJM) bottom line in sweet, sticky profits.

The packaged-food maker said Friday that fiscal second-quarter earnings boomed more than 170%, blowing past Wall Street's estimates by 18 cents a share, according to Thomson Reuters. Even more impressive, revenue leaped by 52%.

Smucker may be best known for its eponymous jams and jellies -- other brands include Jif, Hungry Jack, Crisco and Pillsbury -- but it's the Folgers coffee business the company acquired from Procter & Gamble (PG) last year that's jolting growth.
Next Year Looks Sweet

Shares popped on the better-than-expected results, but there's still a lot of value left in the stock. Standard & Poor's analyst Tom Graves reiterated his strong buy on Smucker Friday, saying he's pleased by the strength of the U.S. coffee business and thinks the stock should trade at a 10% premium to competitors. Even better, Graves expects the company to raise its dividend in 2010.

That makes the relative valuation look tasty, indeed. On a forward earnings basis, Smucker shares trade at a 25% discount to the S&P 500 ($INX) and a 10% to their own five-year average, according to Thomson Reuters. The stock offers even deeper discounts when measured by trailing earnings.

Meanwhile, analysts' average price target stands at $62.33. Throw in the 2.6% dividend yield, and you get an implied upside of nearly 14% in the next 12 months or so.
Read Full Story

Markets

S&P 500 2,274.64 4.20 0.18%
DJIA 19,885.73 -5.27 -0.03%
NASDAQ 5,574.12 26.63 0.48%
DAX 11,550.32 -78.86 -0.68%
HANG SENG 22,718.15 -219.23 -0.96%
NIKKEI 225 19,095.24 -192.04 -1.00%
USD (per EUR) 1.06 0.00 -0.30%
USD (per CHF) 1.01 0.00 0.20%
JPY (per USD) 114.09 -0.13 -0.12%
GBP (per USD) 1.21 0.00 0.18%

From Our Partners