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With a Name Like Smuckers...


Why the J.M. Smucker Co. looks set to grow in 2013.

Shares of The J. M. Smucker Co. (NYSE:SJM) were bolstered after a strong fiscal first quarter performance, which included a dividend yield of 2.5% and an improved sales guidance. With strong estimate revisions, the jam and jelly staple hit a new 52-week high of $87.81 on October 4. Furthermore, this Zacks #2 Rank (Buy) is expected to grow 10.1% in fiscal 2013.

Strong First Quarter

On August 17, Smucker reported fiscal first quarter adjusted earnings of $1.17 per share, which surpassed last year's $1.12 by 4.5% and exceeded the Zacks Consensus Estimate of $1.00 by 17%.

Net sales in the quarter increased 15% year over year to $1.36 billion, primarily driven by volume gains on the back of product innovation and productivity initiatives. The company's acquisition of the North American foodservice coffee and hot beverage business of Sara Lee Corporation on January 3, 2012 also contributed 7 percentage points to net sales growth. The revenue result was in line with the Zacks Consensus Estimate. [Editor's note: Sara Lee is no more. The dough and hot beverage division was transferred to Ralcorp (NYSE:RAH) and J.M. Smucker. The international coffee units were put into a private company, DE Master Blenders, based in Amsterdam. The remaining North American business units of Sara Lee were renamed Hillshire Brands (NYSE:HSH).]

Smucker paid a dividend of $.52 per share in the first quarter of fiscal 2013, reflecting an 8.0% increase from the payout in the year-ago quarter. The current dividend payment affirms a yield of 2.5%.

Smucker anticipates net sales for fiscal 2013 to increase 7% over the prior-year period, reflecting contribution from the Sara Lee business. Adjusted earnings are expected at the higher end of its $5.00 to $5.10 per share range.

Smucker is expected to report its fiscal second quarter results on November 16. The Zacks Consensus Estimate is pegged at $1.44 per share. The company has beaten the Zacks Consensus Estimate in 8 of the past 10 quarters, delivering an average earnings surprise of 6.6% over that period.

Earnings Estimates Advance

Over the past 60 days, the Zacks Consensus Estimate for fiscal 2013 increased by 11 cents or 2.2% to $5.21, indicating year-over-year growth of 10.1%. The Zacks Consensus Estimate for fiscal 2014 advanced 6 cents or 1.1% to $5.66 over the same period, representing growth of 8.7%.
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No positions in stocks mentioned.
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