Morningstar Rating

Stock Research and Analysis

by Ken Perkins

Bulls Say

Smucker's strong market shares in coffee, peanut butter, and fruit spreads give the company a solid negotiating position with customers, as retailers have a strong incentive to stock Smucker products to increase traffic.
Improved employment and confidence could prompt consumers to trade up to name brands, allowing Smucker to generate higher volumes, charge higher prices, and increase profits.
If Smucker can hold a portion of previously enacted price increases while cost inflation moderates, margin expansion could be greater than we currently anticipate (250 bps in fiscal 2014). Read more 

Bears Say

Retail industry consolidation gives big-box retailers more buying power to negotiate lower prices, to the detriment of food suppliers.
A weak economic environment in the U.S. could continue for several years, prompting more cost-conscious consumers to trade down to lower-priced private-label products.
A spike in commodity cost inflation during a period of high unemployment could result in an unfavorable combination of lower sales prices, lower volume, and margin contraction. Read more 

Management

We give Smucker a standard rating for its stewardship of shareholder capital. In addition to reinvesting in the business, Smucker pays out nearly 40% of its earnings in dividends, and has also returned cash to shareholders via share repurchases. In   Read more 

Profile

Smucker manufactures and distributes coffee, fruit spreads, peanut butter, shortening and oils, baking mixes and frostings, and natural products under its portfolio of category-leading   Read more 

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