The J.M. Smucker Company (NYSE:SJM)

CAPS Rating: 5 out of 5

The Company operates principally in one industry, the manufacturing and marketing of branded food products on a worldwide basis, although the majority of the Company's sales are in the United States.

Recs

8
Player Avatar TMF1000 (99.68) Submitted: 9/22/2011 12:11:48 PM : Outperform Start Price: $67.04 SJM Score: -28.87

Caps price: 71.96 - Reupping this one to strengthen overall caps portfolio. Finding 200 stocks that outperform the markets without going short isn't easy. over time, I want to have my best ideas listed. Even so its going to take more years to accomplish. I do build my caps portfolio very similarly as I build my own portfolio. I am always strengthening my portfolio by buying at better and better value points. Since caps is only a one value point tool, I reup to simulate buying at better and better value points.

They continue to raise their dividend - the annual dividend now is $1.96 giving them a dividend yield of 2.7%. I add to my dividend paying stocks when I believe the economy is about to take a hit. I don't over lighten growth companies. They will give me opportunities to add to them next. But these bad times gives me a chance to add to my dividend paying companies at higher yields that offer maximum growth. These companies tend to be mature and past the times when they can give investors big growth, but during bad times you can lock in both a higher yield and more growth.

SJM has a long history of success - over 100 years. They own about 40% of the peanut butter and fruit spread market. And they have some big coffee brands. They are investing in their future which has hurt cash flow recently, but should mean greater growth in 2012 and beyond. The dividend yield is back by cash flow and nearly a billion in assets. Operating income is about 11 times interest expense.

In bad times, investors will seek companies that pay a dividend as a safe haven for some of their money. I believe they will continue to beat the S&P500

February 17, 2011 3Q:2011 earnings’ highlights:
** Revenues were $1.312 billion up from $1.206 billion
** TTM revenues were $4.72 billion or $39.82 per share
** Earnings were $1.11 down from $1.14
** TTM earnings were $4.22
** Diluted share count 118.434 million
** Cash flow for nine months were $283.3 million down from $399 million
** TTM cash flow was $460.8 million or $3.89
** Cash and securities $588.2 million: Debt $1.27 billion
** Annual dividend $1.76 per share
** Trading range between February 17, 2011 and June 9, 2011 was $67.54 to $79.84: PE ratio range was 16 to 18.92: Cash flow yield range was 4.9% to 5.6%: Dividend yield range was 2.2% to 2.6%

June 9, 2011 4Q:2011 earnings’ highlights:
** 4Q revenues were $1.187 billion up from $1.069 billion
** Fiscal 2011 $4.826 billion up from $4.605 billion
** TTM revenues were $4.826 billion or $41.81
** Diluted share count 115.43 billion
** 4Q earnings were $0.82 up from $1.01
** Fiscal 2011 earnings $4.05 down from $4.15
** Dividends per share $1.76
** Cash flow for the year $211.5 million down from $576.495 million
** Cash flow for the quarter Negative ($71.8 million) down from $177 million
** TTM cash flow was $211.5 million or $1.83 per share
** Cash $319.845 million: Debt $1.3 billion
** Trading range between June 9, 2011 and August 18, 2011 was $70.08 to $80.25: PE ratio was 17.3 to 19.81: PS ratio range was 1.68 to 1.92: Cash flow yield range was 2.28% to 2.6%: Dividend yield range was 2.3% to 2.5%

August 18, 2011 1Q:2012 earnings’ highlights:
** Revenues were $1.189 billion up 14% from $1.047 billion
** TTM revenues were $4.97 billion or $43.47 per share
** Earnings were $0.98 up from $0.86
** TTM earnings were $4.17
** Annual dividends $1.92
** Cash flow for the quarter was negative ($125.87 million) down from ($54.184 million)
** TTM Cash flow was $139.8 million or $1.22
** Diluted share count 114.335 million
** Cash $102.475 million: debt $1.31 billion: Assets $926 million
** Trading range between August 18, 2011 and the present September 22, 2011 was $66.43 to $74.81: PE ratio range was 15.93 to 17.94: PS ratio range was 1.53 to 1.72: Cash flow yield range 1.6% to 1.84%: Dividend yield range was 2.57% to 2.89%

Member Avatar CoyoteMoney (< 20) Submitted: 1/19/2012 12:14:35 PM
Recs: 1

Very good write up. My only caveats are that fluctuating coffee prices and higher commodity prices in general could squeeze profit margins as with any other company in the food space. Also the past three years have seen consumers cut back on dining out creating more demand for SJM's product line. That trend has probably bottomed out which could slow forward growth.

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