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Why JM Smucker Stock Is Rated A "Hold With Caution" Before Earnings

Published 11/14/2017, 12:25 AM
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JM Smucker Company (NYSE:SJM) is a $12 billion company today. Investors that bought shares one year ago are sitting on a -19.8% total return. That's below the S&P 500's return of 21.88%.

JM Smucker stock is underperforming the market. It's beaten down, but it reports earnings this week. So is it a good time to buy? To answer this question, we've turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.

Our system looks at six key metrics...

Earnings-per-Share (EPS) Growth: JM Smucker reported a recent EPS growth rate of -23.29%. That's below the food products industry average of 28.49%. That's not a good sign. We like to see companies that have higher earnings growth.

Price-to-Earnings (P/E): The average price-to-earnings ratio of the food products industry is 30.12. And JM Smucker's ratio comes in at 16.62. It's trading at a better value than many of its competitors.

Debt-to-Equity : The debt-to-equity ratio for JM Smucker stock is 75.42%. That's above the food products industry average of 66.83%. That's not a good sign. JM Smucker's debt levels should be lower.

Free Cash Flow per Share Growth : JM Smucker's FCF has been higher than that of its competitors over the last year. That's good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It's one of our most important fundamental factors.

Profit Margins : The profit margin of JM Smucker comes in at 7.25% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. JM Smucker's profit margin is below the food products average of 8.78%. So that's a negative indicator for investors.

Return on Equity : Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for JM Smucker is 7.82%, and that's below its industry average ROE of 17.05%.

JM Smucker stock passes two of our six key metrics today. That's why our Investment U Stock Grader rates it as a Hold With Caution.

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