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Packaged foods company J.M Smucker (NYSE:SJM) met Wall Street’s revenue expectations in Q3 CY2024, with sales up 17.2% year on year to $2.27 billion. Its non-GAAP profit of $2.76 per share was 10.2% above analysts’ consensus estimates.
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J. M. Smucker (SJM) Q3 CY2024 Highlights:
- Revenue: $2.27 billion vs analyst estimates of $2.26 billion (17.2% year-on-year growth, in line)
- Adjusted EPS: $2.76 vs analyst estimates of $2.51 (10.2% beat)
- Adjusted EBITDA: $554.3 million vs analyst estimates of $525.6 million (24.4% margin, 5.5% beat)
- Management raised its full-year Adjusted EPS guidance to $9.90 at the midpoint, a 1% increase
- Operating Margin: 7.5%, down from 15.4% in the same quarter last year
- Free Cash Flow Margin: 14%, up from 1.5% in the same quarter last year
- Sales Volumes rose 2% year on year (4% in the same quarter last year)
- Market Capitalization: $12.09 billion
Shelf-Stable Food
As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years.J. M. Smucker is one of the larger consumer staples companies and benefits from a well-known brand that influences consumer purchasing decisions. However, its scale is a double-edged sword because there are only so many big store chains to sell into, making it harder to find incremental growth. To accelerate sales, J. M. Smucker must lean into newer products.
As you can see below, J. M. Smucker’s 3.8% annualized revenue growth over the last three years was sluggish, but to its credit, consumers bought more of its products.
This quarter, J. M. Smucker’s year-on-year revenue growth was 17.2%, and its $2.27 billion of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 1.3% over the next 12 months, a slight deceleration versus the last three years. This projection is underwhelming and suggests its products will face some demand challenges.
Volume Growth
Revenue growth can be broken down into changes in price and volume (the number of units sold). While both are important, volume is the lifeblood of a successful staples business as there’s a ceiling to what consumers will pay for everyday goods; they can always trade down to non-branded products if the branded versions are too expensive.J. M. Smucker’s average quarterly volume growth was a healthy 2.6% over the last two years. This is pleasing because it shows consumers are purchasing more of its products.
In J. M. Smucker’s Q3 2025, sales volumes jumped 2% year on year. This result shows the business is staying on track, but the deceleration suggests growth is getting harder to come by.