Stock of the Day
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J.M. Smucker (SJM)
J.M. Smucker Beats Expectations with Help from Folgers
Although at times it has seemed like the entire economy has been suffering in recent months, there have been some sectors which have prevailed while others faltered. Discount retailers such as Wal-Mart (WMT: Charts, News, Offers) have received a boost from consumers who were looking for bargains on their everyday purchases, and food manufacturers have been able to benefit from a change in behavior as well, as many consumers have opted for less eating out, and more cooking at home. J.M. Smucker was one of the main companies in the spotlight today, to see if its earnings report could continue a positive trend seen in the processed food industry.
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| Stock Analysis |
Analysts had been predicting that Smucker would be announcing positive earnings for the first quarter, and Smucker passed the test with flying colors. Since last year, Smucker's profit more than doubled, jumping from $42.3 million to $98.1 million. Revenue rose sharply as well, growing from $663.7 million to $1.05 billion. After removing some one-time costs for restructuring and other activities, the company's earnings worked out to 92 cents per share, significantly above analysts' estimates of 80 cents per share.
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There is no denying that some of Smucker's profit was attributed to the increased consumer trend of eating more meals at home. However, a larger part of the company's success can ironically be tied to the failures of other companies. In this economic situation, Smucker has been able to acquire a number of new brands from competitors which were trying to focus only on their most profitable brands, and although acquisitions can sometimes be risky (especially in such a volatile time), these actions have paid off well for Smucker. Its biggest success has been its acquisition of Folgers brand coffee, which the company acquired from Proctor & Gamble (PG: Charts, News, Offers) in November. The Folgers brand was also a major contributor to the company's success last quarter, helping the company double their profit in the fourth quarter as well. If Smuckers continues to have the foresight to recognize these wise decisions, this company could easily continue to gain a huge advantage over its competitors.
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J.M. Smucker Commentary:
Frugal Consumers, Cheaper Commodities, Give Smucker a Jolt - Although the title of this article speaks to the changing trend in consumer behavior, the article focuses on the acquisition of the Folgers brand and how it has impacted Smucker.
Will Food and Beverage Stocks Lead the Recovery? - Among Smuckers and other food & beverage companies, there are some which have great potential, both others which remain troubled. Where does Smuckers land in this spectrum?
Smucker Adds Coffee to Its Breakfast Lineup -- And Does It Tax Free - Detailed background information about the financial aspects of the deal made between Smucker and Proctor & Gamble when Smucker acquired Folgers in 2008.
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Oracle says Justice Dept allows $7.4B Sun deal - The merger between Oracle (ORCL: Charts, News, Offers) and Sun Microsystems (JAVA: Charts, News, Offers) has received approval from the Justice Department, but what questions remain, as the European Commission still debates this acquisition?
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Profile |
Click here to view a detailed profile of J.M. Smucker.
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