THE J. M. SMUCKER COMPANY (SJM): what the price requires

The current priced-in claim for THE J. M. SMUCKER COMPANY (SJM) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/SJM

Headline

FieldValue
TickerSJM
CompanyTHE J. M. SMUCKER COMPANY
Current price$110.97/sh
CompositionCoffee 42% / Frozen handheld 11% / Sweet baked goods 11% / Pet snacks 10% / Peanut butter 9% / Cat food 9% / Fruit spreads 4% / Portion control 2% / Toppings and syrups 1% / Baking mixes and ingredients 1% / Dog food 0% / Cookies 0% / Other 1%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed8.4%
Operating margin (mid-cycle)13.5%
Margin compression implied-5.1pp
Trailing margin (depressed year)-7.6%
Multiple paid16x mid-cycle operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 5.2% sits below it).

Reconcile: at the x-ray's 9.3% required return this reads ~8.8%/yr; the models below use their own rates.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
vs own history-0.26σ
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.37x3expensive
Earnings2.37x2expensive
Relative0.65x2justifies
Growth0.85x5justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.3%); the inversion above states its own rate.

Per-Model Detail (n=12)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$246.950.45xyesFCF base $1.2B, growth 4% (input: historical growth), terminal g 3.7%, WACC 7.3%, 5yr projection
DCF Exit MultipleGrowth$129.840.85xyesExit EV/EBITDA: 40.6x / 42.6x / 44.6x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$169.710.65xyesP/S fallback (negative EPS): Sector P/S 2.0x × TTM revenue — excluded from consensus
Simple DDMGrowth$36.343.05xyesDPS $4.38, g=-2.5% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$155.340.71xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$51.982.13xyesReference only (book value floor): BV/sh $51.98, ROE negative
Two-Stage Excess ReturnAsset$46.782.37xyesReference only (book value with convergence): BV/sh $51.98, ROE converges to ke
Discounted Future Market CapGrowth$85.081.30xyesRev $9.1B, growth 4% (input: historical growth; tapered), Terminal P/S: 1.1x / 1.3x / 1.5x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$0.00—noNegative/zero EPS — earnings-based value floored at $0
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$43.682.54xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.06B × (1−21%) / WACC 7.3% → EPV (no growth)
Residual IncomeAsset——no—
Graham NumberAsset——no—
EV/EBITDA RelativeRelative$0.0111097.00xyesEBITDA $0.45B × sector EV/EBITDA 14.0x (excluded from median)
FCF YieldEarnings$50.442.20xyesFCF $1156.2M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings——no—
ROIC-Justified P/BAsset$19.855.59xyesBV $51.98 × (ROIC 2.8% / WACC 7.3%)
P/Sales SectorRelative$169.710.65xyesRevenue $9.05B × sector P/S 2.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings——no—
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$7.0b
Net debt / NOPAT (after-tax)7.32x
Net debt / operating income (pre-tax)5.78x
Burning cashno

Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 13.5%); the trailing year was depressed.

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

Bull Case

The most encouraging thing in the recent numbers is the direction of profit despite a hard year, and that is the right place to start. Smucker grew comparable net sales 7% in fiscal 2025, with U.S. Retail Coffee net sales up $102.2 million on net price realization that added 5 percentage points from higher pricing for Folgers and Café Bustelo. Coffee is the largest and most defensible part of the portfolio: it is a daily-habit category where brand loyalty is sticky and pricing tends to hold, and Smucker has demonstrated it can take price. Into fiscal 2026 that continued, with management reporting coffee and Hostess driving profit growth and adjusted earnings rising in the most recent quarter.

Uncrustables is the genuine growth engine inside an otherwise mature business. The frozen handheld and spreads segment carries the Uncrustables, Jif and Smucker's brands, and management has repeatedly pointed to Uncrustables as a high-confidence grower bucking the volume softness elsewhere in the portfolio. A single brand scaling from snack into a broader frozen-handheld habit gives Smucker a volume story most packaged-food peers lack, and it is the kind of organic growth that does not depend on price increases that eventually meet consumer resistance.

The bull case turns on cash generation and deleveraging. At about 16 times through-the-cycle operating income the price already assumes little growth, so the company does not need to surprise to the upside; it needs to convert its staple brands into cash, pay down the debt taken on for Hostess, and stabilize the weak parts. Management's fiscal 2027 framing centers on exactly that: profit growth in coffee and Hostess, continued Uncrustables momentum, and a focus on debt reduction and disciplined capital deployment. The share count has edged down, and a portfolio of category-leading staples throwing off steady cash at a low multiple is a defensive holding the market is pricing conservatively.

Bear Case

The fragile assumption baked into the bull case is that the Hostess acquisition stops destroying value, and the evidence so far argues the other way. Smucker recorded $961.7 million of impairment charges in fiscal 2026 on the Sweet Baked Snacks reporting unit and the Hostess trademark, eliminating goodwill for that unit and reflecting lower long-term expectations for the acquired business. The 10-K is candid that the company faced "execution challenges from a distribution, merchandising, and competitive standpoint, which resulted in lost market share," and that the "sustained underperformance of the sweet baked goods category since acquisition" forced a cut to the long-term growth rate. A turnaround that requires roughly 30% profit growth to deliver is a turnaround that has not yet happened, and the impairment is the company conceding it overpaid.

The second fragile assumption is that coffee pricing holds while volumes do not. Smucker's recent sales growth has leaned heavily on net price realization, with one period showing a 10-percentage-point lift from pricing partially offset by a 4-point drag from volume and mix as coffee and sweet baked goods volumes fell. Pricing can carry revenue for a while, but a packaged-food company that grows the top line by charging more for fewer units is on a treadmill: at some point consumers trade down to private label, and the volume decline accelerates. Green coffee input costs are also volatile and outside the company's control, so the pricing power that looks like strength can compress margins if costs rise faster than the company can pass them through.

The leverage is the amplifier under both risks. Net debt of about $7.0 billion runs more than five times operating income, much of it taken on for the Hostess deal that just got written down. That debt has the first claim on cash flow, which constrains how much can go to deleveraging, the dividend, and brand investment all at once. The price already reflects a cautious view, paying only about 16 times through-cycle operating income, but the bear is that the through-cycle margin itself drifts lower if Hostess does not recover and coffee volumes keep eroding. A levered, slow-growth staples business with a failed acquisition on the books can stay cheap for a long time, and the debt removes the cushion to wait it out comfortably.

Valuation

At today's price the market pays only about 16 times through-the-cycle operating income, a multiple so low that the price sits below what even a 5%-a-year decline in operating profit would warrant. That is the bound, not a solved growth rate, and it tells you the market is not asking Smucker to grow; it is pricing a stable staples business in modest decline. The figure uses the company's own mid-cycle margin of about 13.5% on current revenue rather than the depressed trailing year, because the trailing margin near 4% was distorted by the large Hostess impairment and would otherwise overstate how stretched the business is.

The valuation methods split along a clear line. The relative-multiple and forward-growth methods land at or near the price, justifying it, while the asset-value and earnings-power methods call it expensive, partly because the recent impairment cut into book value and reported earnings. When the peer-multiple lens already supports the price, the stock is priced as a discounted staples name rather than a stretched one, which fits a portfolio of category-leading brands the market has marked down for the Hostess misstep and soft volumes. Against its food-and-beverage cohort, this is a below-average multiple, consistent with a slower grower carrying more leverage than most.

Solvency is where the analysis has to land, because the debt dominates the equity story. Net debt of about $7.0 billion runs more than five times operating income, and much of it financed the Hostess acquisition now written down. That leverage means the free cash flow the staple brands generate is split between servicing debt, funding the dividend, and reinvesting, and the company's own fiscal 2027 priority is debt reduction. The decisive variable for the price is therefore not the multiple, which is already cautious; it is whether the through-cycle operating margin holds as the company deleverages, because a levered business that fails to stabilize its weakest segment can see the very margin the valuation rests on drift below where the methods assume it sits.

Catalysts

Smucker closed fiscal 2026 in late April and reported results in June, framing strong full-year performance and a fiscal 2027 outlook built on profit growth in coffee and Hostess, continued Uncrustables momentum, and debt reduction. The most recent quarter showed adjusted earnings rising, with coffee and Hostess driving profit growth, even as reported results carried the weight of the year's impairment.

The Hostess turnaround is the catalyst with the most at stake. After recording $961.7 million of impairment charges in fiscal 2026 on the Sweet Baked Snacks unit and Hostess trademark, management is targeting a meaningful profit-growth recovery in the segment through improved cost management. Each quarter of sweet-baked-snacks results is a referendum on whether the integration and competitive execution problems that drove lost market share are being fixed, and the size of the prior impairment means the market will be skeptical until the numbers show it.

Coffee pricing and volume are the other watch points. Recent sales growth has leaned on net price realization, with double-digit pricing offsetting volume and mix declines in coffee. The sustainability of that pricing against green-coffee cost swings and the risk of consumers trading toward private label will shape margins, while Uncrustables remains the clearest source of organic volume growth. The trajectory of debt reduction through fiscal 2027 is the financial milestone that determines how much of the staple-brand cash flow ultimately reaches shareholders.

Peer Cohorts (Per Segment, With Filing Citations)

U.S. Retail Coffee (reported)

U.S. Retail Frozen Handheld and Spreads (reported)

U.S. Retail Pet Foods (reported)

Sweet Baked Snacks (reported)

Away From Home (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

SJM FY2025 10-K, June 2025 · SJM fiscal 2026 results, 2026 · SJM fiscal 2027 outlook, June 2026 · SJM fiscal 2026 10-K, 2026 · SJM fiscal 2026 results and fiscal 2027 outlook, June 2026

View the full interactive SJM report on boothcheck