The J. M. Smucker Company (SJM) Earnings & Analysis

Latest quarter

The company reported Q1 FY2027 revenue of $2.2 billion, up 5.02% from $2.1 billion a year earlier. Revenue exceeded the consensus estimate of $2.1 billion by 5.42%, while adjusted EPS of $3.24 exceeded the consensus estimate of $2.21 by 46.6%.

The filing shows diluted EPS of $3.03, compared with −$0.41 in Q1 FY2026. The company attributed the sales increase primarily to higher coffee pricing, while volume/mix increased through Uncrustables sandwiches and coffee and was partly offset by sweet baked goods and peanut butter. U.S. Retail Coffee, Frozen Handheld and Spreads, Pet Foods, and Away From Home recorded sales growth, while Sweet Baked Snacks sales declined −7.00%.

The filing reports gross margin of 44.1%, up 21.7 percentage points year over year, and operating margin of 23.1%, up 20.9 percentage points. The company attributed higher gross profit to lower costs, tariff refunds, higher pricing and favorable volume/mix. The filing reports free cash flow of $337.6 million, compared with −$82.0 million a year earlier.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the earnings call, Mark Smucker said the company was taking a prudent view of coffee because of commodity volatility, category dynamics and the consumer environment. He said Bustelo, Dunkin’ and Café Bustelo delivered growth during the quarter. When analysts asked about coffee pricing, Smucker said the company was using promotions and prices held at a slightly lower level to pass through deflationary commodity conditions to customers and consumers.

Tucker Marshall said the company saw ongoing momentum entering the second quarter, while maintaining prudent volume assumptions for coffee over the next nine months. He said Frozen Handheld and Spreads momentum was being led by Uncrustables, and the company raised its growth outlook for the brand to high single digits. Marshall said the company would continue marketing investment and add production capacity, including pre-production expenses for the McCalla, Alabama facility. He said those expenses could cause the Uncrustables margin profile to decline slightly over the next few quarters.

Asked about Hostess, Smucker said the business performed as expected in the quarter and was making incremental progress in stabilization. He cited Donets performance, including larger bag sizes and mini churro donuts, and said convenience-channel traffic remained challenged. He said the company had not yet lapped SKU rationalization.

On spreads, Smucker said the company did not view peanut-butter-category softness as structural. He cited refreshed Jif packaging, new marketing focused on snacking and the launch of Jif Simply, while saying fruit spreads were at the start of a brand refresh.

Marshall said underlying inflation was in the mid-single digits, above the company’s initial expectations because of freight, commodities and other ingredients, and said this had been incorporated into guidance. On capital deployment, he said the company planned to pay down about $500 million of debt during FY2027, had reached its three-times leverage ratio in the first quarter, remained committed to the quarterly dividend and could begin considering share repurchases.

Guidance

The company said it increased its FY2027 outlook for net sales, adjusted EPS and free cash flow. The company now expects FY2027 adjusted EPS of $10.50–$11.00 and free cash flow of $1.1 billion. The company also expects FY2027 capital expenditures of $325.0 million.