J. M. Smucker Earnings: Margins Shrink Again, but Net Income Climbs

S&P 500 (NYSE:SPY) component J. M. Smucker Company (NYSE:SJM) reported net income above Wall Street’s expectations for the fourth quarter. J. M. Smucker manufactures and markets branded food products on a worldwide basis.

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J. M. Smucker Company Earnings Cheat Sheet

Results: Net income for J. M. Smucker Company rose to $104.1 million (93 cents per share) vs. $94.9 million (82 cents per share) in the same quarter a year earlier. This marks a rise of 9.7% from the year-earlier quarter.

Revenue: Rose 14.2% to $1.36 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: J. M. Smucker Company reported adjusted net income of $1.10 per share. By that measure, the company beat the mean estimate of 99 cents per share. Analysts were expecting revenue of $1.35 billion.

Quoting Management: “We are pleased to have delivered another year of record sales and year-over-year earnings per share growth in a complex macroeconomic environment,” commented Richard Smucker, Chief Executive Officer. “As we look ahead, we will continue to invest in our portfolio of trusted brands, build upon our recent acquisitions, advance our extensive pipeline of innovation, further our supply chain productivity initiatives, and build upon the foundation being laid in China. We are well-positioned for continued growth.”

Key Stats:

The company has seen double-digit year-over-year percentage revenue growth for the past five quarters. Over that span, the company has averaged growth of 13.8%, with the biggest boost coming in the second quarter when revenue rose 18.4% from the year earlier quarter.

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 1.8 percentage points to 33.7% from the year-earlier quarter. In that span, margins have contracted an average of 3.9 percentage points per quarter on a year-over-year basis.

The company trumped estimates last quarter after falling shy in the two quarters prior. In the third quarter, it missed the mark by 19 cents, and in the second quarter, it came in under estimates by 10 cents.

Last quarter’s profit increase breaks a streak of two consecutive quarters of year-over-year profit decreases. Net income fell 11.5% in the third quarter and in the second quarter.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the first quarter of the next fiscal year is $1.06 per share, down from $1.08 ninety days ago. For the fiscal year, the average estimate has been unchanged at $4.69 a share.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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