J.M Smucker earnings: Stock will be in 'penalty box' for a while

Yahoo

10-06-2025

The J.M. Smucker Company (SJM) — which owns consumer brands like Jif peanut butter, Uncrustables, Hostess, Folgers coffee, and Milk-Bone dog treats — is seeing shares drop Tuesday morning after disappointing investors on its fiscal full-year 2026 guidance. The snack brand reported mixed fiscal fourth quarter 2025 results, topping earnings estimates and falling the slightest bit short of revenue forecasts.
TD Cowen managing director Robert Moskow comes on Catalysts to talk about his takeaways from the earnings release and earnings call.
To watch more expert insights and analysis on the latest market action, check out more Catalysts here.
J.M. Smucker sinking after issuing disappointing guidance for fiscal year 2026, the maker of Folders coffee and Jif peanut butter reporting mixed results for the fourth quarter, with net sales declining 3% from a year earlier. Joining me now, Robert Moscow. He is TD Cowen's managing director. Moscow, so sorry about that. Thank you so much for joining us. Talk to me about how you are viewing these results. The stock right now having its biggest drop since 2006. Why is there such a negative reaction?
Um, well, the the big uh, uh negative news here was coffee. Um, we and I think the street expected the company to guide coffee to flat profits for for fiscal 26. Uh, they have to raise prices a lot to offset higher uh, input green coffee costs and and even some tariffs. But in the past, they've done a very good job of of uh, keeping profits somewhat stable as they raise price and and managing elasticity. But this guidance is for over a hundred million dollars of a profit gap on coffee. Uh, so downs substantially in fiscal 26. And that's tough for investors to swallow.
It certainly is, but it's also tough for them to swallow the price increases that we've seen with regards to coffee, especially given that we haven't even fully seen the impact of tariff policy yet. I I'm curious if you can talk a little bit about what Smuckers could have done, if anything, to prevent some profit squeezes off the back of that.
Um, well, I I, you know, the coffee input costs are out of their control, but what they're going to do is raise prices in May and then they're going to raise prices again in August, and the cumulative impact is going to be about 20% to the consumer. Uh, they're expecting a 10% volume decline from these actions. Uh, that's a historical relationship for elasticity. Uh, my question on the call was, why so glum? Uh, one month into the fiscal year, volume's actually up in our retail tracking data, and uh, there must be something that they see uh, coming through in the next several months that will hurt that data and and and they must be able to they must see something that there's there's a mismatch that we can't tell in our data.
Did you get a sense of what that is?
Um, some of it's timing, you know, the the the costs come in first and then the pricing comes in after. They say by the end of the year, uh they that their pricing actions will offset the the cost. So maybe that sets up for a fiscal 27, uh which they say will return to normal uh for them in terms of their growth algorithm.
It makes me wonder too. One of the notes I saw from analysts this morning indicated that they have a history, this company, of being a little too cautious when it comes to guidance, and you also said the same. Why so glum? Do you think there's any chance that this is just sort of their approach to moments of volatility, to be more cautious in their signaling to Wall Street and then later surprise to the upside, or do you think it's something more sinister this time?
Yeah, I I think it's possible. Um, I wrote it in my report that uh my first impressions that, you know, they do have a tendency to be very conservative in their guidance. And in fact, if you look at fiscal 25, the year they just finished, a lot of companies missed numbers, they they did not miss numbers. Um, but I I think the stock's going to be in the penalty box for a while here until uh there's more until there's more proof that this price cost relationship with coffee is working to their advantage or at least not as bad as it looks. Um, and then they also have to get past the lingering um overhang on the stock from the hostess acquisition. Uh their capital allocation history has been very spotty. Uh they overpaid for hostess, they just took uh about a billion dollars of a of a charge on that, and they guided hostess even lower than what they uh what they thought the the business would do just a few months ago.