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

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


DJIA 24,834.41 -178.88 -0.72%
NASDAQ 7,378.46 -15.58 -0.21%
NIKKEI 225 22,680.74 -279.60 -1.22%
HANG SENG 30,914.92 -319.43 -1.02%
DAX 13,169.92 92.20 0.70%
USD (per EUR) 1.18 0.00 -0.20%
USD (per CHF) 0.99 0.00 0.05%
JPY (per USD) 110.47 -0.25 -0.23%
GBP (per USD) 1.34 0.00 -0.22%

Can't get enough business news?

Sign up for Finance Report by AOL and get everything from retailer news to the latest IPOs delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.