COMPANY DESCRIPTION

Smucker (J.M.) manufactures and markets food products. Co.'s principal products are coffee, peanut butter, fruit spreads, shortening and oils, baking mixes and frostings, canned milk, flour and baking ingredients, juices and beverages, frozen sandwiches, toppings, syrups, pickles, condiments, and grain products. Co.'s family of brands includes Smucker's®, Folgers®, Pillsbury®, Eagle Brand®, R.W. Knudsen Family®, Hungry Jack®, White Lily®, and Martha White® in the U.S., along with Robin Hood®, Five Roses®, Carnation®, and Bick's® in Canada. In addition, Co. markets products under various other brands, including Millstone®, Dickinson's®, Laura Scudder's®, Adams®, and Santa Cruz Organic®. 

 

ECONOMIC MOAT

SJM’s moat comes from large number of category-leading consumer brands, including Folgers, Jif, and Smucker's. Depth and breadth of Smucker's brands gives the firm significant bargaining power in negotiations with retailers, since many of its brands are well known and drive retail traffic

 

OUTLOOK

Fiscal 2014 (ends April 30, 2015) was a difficult year for J.M. Smucker.  Coffee profits were down 17%. Coffee will remain challenging in the near term, as Smucker's Folgers line faces stiff competition from Maxwell House and Chock full o' Nuts. Smucker finalized the acquisition of Big Heart Pet Brands, the maker of Meow Mix , Milk-Bone, and 9Lives pet foods, among others. SJM has expanded its partnership with Dunkin' Donuts, which now allows Smucker to distribute Dunkin' Donuts K-cups at all major retail outlets. Wall Street has reacted positively to these moves as reflected by the higher share price.    Much of our forecasted potential is now reflected in the share price.

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STRENGTHS

  • Strong brand portfolio

  • Strong inorganic growth

  • Strong growth in revenues

  • Continuous product innovations 

WEAKNESSES

  • Concentrated customer base

  • Small scale operations compared to competitors 

THREATS

  • Intense competition

  • Stringent regulations

  • Fluctuations in raw material prices 

OPPORTUNITIES

  • Growing foodservice industry

  • Growing coffee consumption in the US 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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