JM Smucker (SJM:NYS) Fundamental Valuation Report

Fundamental Valuation Report

JM Smucker(SJM:NYS)

Consumer Defensive:Packaged Foods

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Close Price/Date
$115.76 (USD) 09/09/2020

Weighted Valuation
$119.98 (USD)

Overall Rating
Fairly valued to slightly Undervalued by 3.6%

Valuation Models Adjusted Book Value: $137.95 (USD)
Valuation Methods This company is:
Cash Flow: Undervalued on a Cash Flow Valuation
Comparable Company: Undervalued on a Comparable Valuation
Asset: Undervalued on an Asset Valuation
According to Analyst consensus at $108.00 this stock is Overvalued

Company Overview (SJM:NYS USD)

Price 115.76
Range 114.35 – 117.02
52 week 95.79 – 121.73
Open 115.03
Vol / Avg. 871820/939939
Mkt cap 13.21B
P/E 15.31
Div/yield 3.49/0.03
EPS 6.84
Shares 114.07M
Beta 0.24

Company Description

J.M. Smucker is a packaged food company that primarily operates in the U.S. retail channel (87% of fiscal 2020 revenue), but also in U.S. food-service (7%), and international (6%). Its largest category is pet food and treats (38% of 2020 revenue), with popular brands such as Milk-Bone, Meow Mix, 9Lives, Kibbles ‘n Bits, Nature’s Recipe, Natural Balance, and Rachael Ray Nutrish. Its second- largest category is coffee (32%) with the number-two brand Folgers and number-six Dunkin’ Donuts. Other large categories are peanut butter (9%), with number-one Jif and number-three Smucker’s, fruit spreads (5%) with number-one Smucker’s, frozen hand-held foods (5%) with number-one Uncrustables, and oils (3%) with number-two Crisco.

Valuation Details

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for SJM:NYS

Using a discounted cash flow model we generated an intrinsic value of $181.52 (USD) for SJM:NYS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

SJM:NYS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $181.52 1% 5% 1% 5%
WACC (or Ke) 3.52 $272.08 $131.05
Terminal Growth Rate 0.00 $134.78 $265.35
Tax Rate 0.24 $194.53 $168.50
Cash Flow 1,256,720,406 $169.51 $193.52
Capital Expenditures -264,680,000 $179.15 $183.88
Long Term Debt 5,351,700,000 $183.86 $179.17

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $175.85 (USD) for SJM:NYS. We also generated a valuation of $143.91 (USD) using other metrics and comparables.
The comparable companies were Campbell Soup (CPB:NYS), Central Garden & Pet (CENTA:NAS), Flowers Foods (FLO:NYS), Lancaster Colony (LANC:NAS) and Sanderson Farms (SAFM:NAS).

Company SJM:NYS End Date Value
Earnings/Share $7.56 (USD)
Book Value/Share $73.16 (USD)
Sales/Share $70.45 (USD)
Cash Flow/Share $12.71 (USD)
EBITDA/Share $14.65 (USD)
Price Based on Comps Adjustment Factor (%)
$241.68 (USD) -31.1
$280.48 (USD) -48.9
$112.34 (USD) 51.2
$141.66 (USD) -30.7
$321.71 (USD) -1.7
15.31 PE Ratio 31.97 23.38 18.41 50.49 35.60 0.00
1.58 PB Ratio 3.83 5.36 1.90 3.76 6.22 1.93
1.64 PS Ratio 1.59 1.59 0.80 1.18 3.65 0.75
9.11 PCF Ratio 15.15 9.93 10.14 11.58 28.49 15.64
10.27 EV to EBITDA 21.96 11.27 9.88 20.88 26.38 41.38


Using a multiples approach we generated a valuation of  $153.24 (USD) for SJM:NYS

Company SJM:NYS End Date Value
Earnings/Share $7.56 (USD)
Book Value/Share $73.16 (USD)
Sales/Share $70.45 (USD)
Cash Flow/Share $12.71 (USD)
EBITDA/Share $14.65 (USD)
Price Based on Comps Adjustment Factor
$167.56 (USD) 0
$133.38 (USD) 0
$128.62 (USD) 0
$142.66 (USD) 0
$193.97 (USD) 0
Ratios Ratio Average
PE Ratio 22.16
PB Ratio 1.82
PS Ratio 1.83
PCF Ratio 11.22
EV to EBITDA 13.24

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  SJM:NYS for the last 10 years was  1.89

We ran the Adjusted Book Value for  SJM:NYS and generated a book value of  $73.16 (USD)
By multiplying these we get an adjusted valuation of  $137.95 (USD)

Analyst Data

In the Stockcalc database there are 2 analysts that provide a valuation for SJM:NYS. The 2 analysts have a concensus valuation for SJM:NYS for 2021 of $108.00 (USD).

SJM:NYS JM Smucker

Analyst Recommendation
Buy Hold Sell Rating
(of 5)
Guidance As Of
0 3 1 2.5000 Underperform 2020-9-8

Current Price: 115.76 USD

Analyst Consensus
USD Millions 2021 2022
Mean EPS 8.34 8.26
# EPS Analysts 4 4
Mean Revenue 7,798.30 7,796.10
# Revenue Analysts 2 2
Mean Target Price 108.00
Mean Cash Flow 10.63 12.94
Mean EBITDA 1,441.50 1,465.30
Mean Net Income 960.10 969.30
Mean Debt Outstanding 4,619.50 3,668.30
Mean Tax Rate
Mean Growth Rate -0.29
Mean Capital Expenditure 308.20 292.30

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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