The J.M. Smucker Company (SJM) recently reported record second quarter results and raised fiscal 2010 guidance. The company is trading at 14.7x forward earnings.

Company Description

Smucker manufactures food products in North America Incorporatedluding fruit spreads, coffee, peanut butter, ice cream toppings, sweetened condensed milk and health and natural foods. Its famous brands include Smucker’s, Folgers, Jif, Crisco, Eagle Brand, and Hungry Jack, among others.

Smucker Surprised for the 4th Quarter in a Row

On Nov 20, Smucker reported fiscal second quarter 2010 earnings that easily surprised on estimates by 17.31%. The company has been on a hot streak, as it has beat the Zacks Consensus by an average of 15.11% over the last 4 quarters.

Earnings per share were $1.22 compared to the Zacks Consensus of $1.04.

The addition of Folgers, which was acquired a year ago, really boosted the quarter. Sales rose 52% compared to fiscal second quarter 2009. Excluding Folgers and foreign exchange, sales fell 6% year over year.

Volume rose 1%. Excluding Folgers, the volume gains were driven by Pillsbury, Crisco, Jif and Hungry Jack in the United States and the baking brands in Canada. Fruit spread and canned milk were the weak categories in the quarter, as well as foodservice and the natural foods businesses.

Folgers volume rose 5% compared to the year ago period, which occurred before the acquisition.

Guidance Raised

Given the solid second quarter results, the company raised fiscal 2010 earnings per share guidance to the range of $3.95 to $4.05 from $3.65 to $3.80.

In response, analysts have been busy raising their estimates. All 9 covering analysts raised fiscal 2010 estimates in the last month to $4.06 from $3.84, which is higher than the company’s guidance.

Fiscal 2011 estimates also jumped by 19 cents to $4.30 per share in the last 30 days.

Value Fundamentals

Smucker is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 1.38. The company also rewards shareholders with a dividend yielding 2.30%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service.

Zacks Investment Research

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