The J.M. Smucker Co. SJM delivered a strong start to fiscal 2027, supported by improved profitability, pricing actions and momentum across key brands.
The company reported adjusted earnings per share of $3.24, up 71% year over year, beating the Zacks Consensus Estimate of $2.21.
Net sales increased 5% year over year to $2,219.3 million, topping the consensus estimate of $2,105 million. Growth was driven by higher net price realization, favorable volume/mix and tariff refunds received during the quarter.
The J. M. Smucker Company Price, Consensus and EPS Surprise
The J. M. Smucker Company price-consensus-eps-surprise-chart | The J. M. Smucker Company Quote
SJM Expands Profitability in Q1
SJM’s first-quarter adjusted gross profit increased 28% year over year to $950.2 million. Adjusted gross margin expanded to 42.8% from 35.2% in the prior-year quarter, driven by tariff refunds, higher net price realization and favorable volume/mix. Excluding the $115 million benefit from tariff refunds, adjusted gross margin still improved 240 basis points, reflecting underlying progress in profitability.
Adjusted operating income increased 46% year over year to $540.7 million, with adjusted operating margin improving to 24.4% from 17.5%. The rise reflected higher adjusted gross profit, partially offset by increased selling, distribution and administrative expenses, including higher marketing and administrative investments.
Smucker Highlights Brand Momentum
Smucker continued to invest in its largest growth platforms during the quarter. Uncrustables delivered 12% net sales growth at the total company level, driven by double-digit volume/mix growth, record quarterly volume and increased household penetration.
Cafe Bustelo also posted strong momentum, with total company net sales increasing 23%. Management noted that the brand continues to expand household penetration and remains focused on increasing its presence in the at-home coffee category.
SJM Reports Segment Performance
SJM’s U.S. Retail Coffee segment generated net sales of $807.8 million, up 13% year over year. Higher pricing contributed 10 percentage points of growth, while volume/mix increased 2 percentage points, driven by Dunkin’ and Café Bustelo. Segment profit rose 124% to $300 million, aided by tariff refunds and pricing actions.
The U.S. Retail Frozen Handheld and Spreads segment posted net sales of $499.3 million, up 3% year over year. Growth was supported by Uncrustables, while peanut butter and fruit spreads faced pressure. Segment profit increased 13% to $129.7 million.
The U.S. Retail Pet Foods segment recorded net sales of $371.7 million, up 1% year over year, supported by cat food growth. Segment profit declined 2% to $98.9 million due to higher costs and increased marketing spending. Sweet Baked Snacks sales plunged 7% to $236.5 million, pressured by lower volume/mix in snack cakes and breakfast products.
Away From Home sales rose 3% to $203.7 million, supported by Uncrustables and fruit spreads. Segment profit increased 19% to $61.2 million, reflecting tariff refunds and favorable volume/mix.
Smucker Raises Fiscal 2027 Outlook
Smucker raised its fiscal 2027 outlook following the better-than-expected first-quarter performance. The company now expects net sales to decline 1% to 2% compared with its previous outlook for a 3% to 4% drop.
Adjusted earnings per share guidance was increased to $10.50-$11.00 from $9.75-$10.25. The updated outlook reflects stronger momentum, improved sales expectations and a net benefit of approximately $60 million related to tariff refunds after planned investments in selling, distribution and administrative expenses.
The company also raised its free cash flow outlook to approximately $1,100 million from $1,000 million. Management expects adjusted gross profit margin of approximately 38.75% and capital expenditures of $325 million for fiscal 2027.
SJM Strengthens Cash Flow Position
SJM generated operating cash flow of $425.7 million in the quarter compared with cash used for operating activities of $10.6 million in the prior-year period. Free cash flow improved to $337.3 million from negative $94.9 million, reflecting higher earnings and lower working capital requirements.
The company reduced debt by approximately $230 million during the quarter and reached its leverage target of at or below 3.0X net debt to adjusted EBITDA earlier than expected. Management remains focused on debt reduction while maintaining investments in growth initiatives, dividends and potential share repurchases.
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Shares of this Zacks Rank #3 (Hold) company have rallied 22.6% over the past three months compared with the industry’s growth of 12.6%.
Better-Ranked Stocks to Consider
The Chefs' Warehouse, Inc. CHEF is a distributor of specialty food and center-of-the-plate products across the United States, Canada and the Middle East. CHEF currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Chefs' Warehouse’s current fiscal-year sales and earnings per share (EPS) implies growth of 10.6% and 33.7%, respectively, from the year-ago figures. CHEF delivered a trailing four-quarter earnings surprise of 30.4%, on average.
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The Zacks Consensus Estimate for The Vita Coco Company’s current fiscal-year sales and EPS calls for growth of 31.6% and 64.7%, respectively, from the year-ago figures.
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The Zacks Consensus Estimate for Darling’s current fiscal-year sales suggests 11.5% growth from the prior-year levels. The consensus estimate for current fiscal-year EPS stands at $6.98, which implies a substantial improvement from the year-ago period. DAR delivered a trailing four-quarter earnings surprise of 38.9%, on average.
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