The Ratings Game: Smucker is betting that continued work-from-home will benefit its coffee and peanut butter business


J.M. Smucker Co.

thinks many workers will keep using their home offices even after the COVID-19 pandemic, which will continue to benefit that company’s coffee and peanut butter businesses.

Smucker talked up its forecast during its earnings call in late February, as well as at other events since.

“In general, management believes J.M. Smucker is positioned well because of its breakfast and lunch exposure given that it is more likely people will work from home on a more frequent basis,” wrote Bank of America analysts in a note following meetings with Chief Executive Mark Smucker and other executives last week.

Bank of America rates Smucker stock neutral with a $124 price objective.

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During the earnings call, Smucker got specific about items that will get a boost.

“Approximately half the U.S. workforce is expected to work remotely on a part- or full-time basis post-pandemic compared to just 30% before the pandemic, driving increased at-home breakfast and lunch occasions, benefiting our coffee and consumer foods business,” he said, according to FactSet.

Folgers and Dunkin’ Donuts coffee are part of the Smucker lineup. Dunkin’ Brands was taken private in an $8.8 billion deal with Arby’s parent Inspire Brands that was announced in Oct. 2020. Smucker’s net coffee sales in the most recent quarter rose 12%.

Jif peanut butter is part of Smucker’s consumer foods lineup. The brand drove 20% sales growth on core peanut butter offerings, according to Smucker.

Stifel analysts are more prepared for moderation.

“Sales growth remains elevated benefiting from elevated at-home food
consumption and Smucker is gaining market share in key categories,” Stifel wrote in note.

“At the same time, as we look ahead from here, we estimate more normalized growth for the business over the next couple quarters and a difficult comparison in FY22 is likely to challenge sales and profit growth.”

Stifel rates Smucker stock neutral with a $125 target price.

Smucker reported fiscal third-quarter earnings and sales that beat expectations and raised its fiscal 2021 guidance.

The company has also been focused on simplifying its portfolio. Smucker announced the sale of the Crisco oils brand to B&G Foods in October 2020, for example.

“We have made great progress in reshaping our portfolio, having completed the sales of the Crisco and Natural Balance businesses in the quarter,” Smucker said on the call.

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“These divestitures underscore our commitment to further our focus on brands and categories that have the greatest growth opportunities over the long term. As we move ahead, we will continue to evaluate all elements of the portfolio and make changes when necessary to ensure our portfolio is positioned for growth.”

Zacks Equity Research called out Smucker, as well as other food companies like Lamb Weston Holdings Inc.

and Hain Celestial Group Inc.

for their efforts at “strengthening their portfolios and rationalizing operational structures” in a Monday report.

Zacks says these three stocks are ones to watch.

Smucker stock is up 13.2% over the past year while the benchmark S&P 500 index

is up 66.3% for the period.


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