JM Smucker Stock Delivers Strong Cash Yield – Upside Ahead?
Here is why we think JM Smucker (SJM) is worth a look.
- Cash Yield: Not many stocks offer free cash flow yield of 6.2%, but JM Smucker stock does
- Fundamentals: 3-Year average revenue growth of 2.9% and operating margin of 16.2% show reasonable fundamentals
- Valuation: SJM stock currently trading at 18% below 2Y high, 6.5% below 1M high, and at a PS lower than 3Y average.
Free Cash Flow Yield refers to free cash flow per share / stock price. Why it matters? If a company produces high amount of cash per share, it can be used to fuel additional revenue growth, or simply paid through dividends or buybacks to shareholders. For quick background, JM Smucker provides branded food and beverage products including coffee, peanut butter, specialty spreads, pet food, and cooking ingredients under well-known consumer brands.
Single stock can be risky, but there is a huge value to a broader diversified approach we take with Trefis High Quality Portfolio. Trefis works with Empirical Asset Management – a Boston area wealth manager – whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio in this asset allocation framework to provide clients better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
| SJM | S&P Median | |
|---|---|---|
| Sector | Consumer Staples | – |
| Industry | Packaged Foods & Meats | – |
| Free Cash Flow Yield | 6.2% | 4.0% |
| Revenue Growth LTM | 2.5% | 5.3% |
| Revenue Growth 3YAVG | 2.9% | 5.3% |
| Operating Margin LTM | 15.5% | 18.7% |
| Operating Margin 3YAVG | 16.2% | 17.8% |
| LTM Operating Margin Change | -2.2% | 0.3% |
| PE Ratio | -7.5 | 24.0 |
But do these numbers tell the full story? Read Buy or Sell SJM Stock to see if JM Smucker still has an edge that holds up under the hood.
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
The Point? The Market Can Notice, And Reward
The below statistics are from high FCF yield selection strategy between 12/31/2016 and 6/30/2025. The stats are calculated based on selections made monthly, and assuming that a stock once picked, can not be re-picked for next 180 days.
- Average 6-month and 12-month forward returns of 10.4% and 20.4% respectively
- Win rate (percentage of picks returning positive) of about 74% for 12-month period
- Not over dependent on market crashes. During non-crash periods as well, this strategy has 12-month average return of nearly 18% with 70% win rate.
But Consider The Risk
That said, SJM isn’t immune to downturns. It fell about 40% in the Dot-Com Bubble and nearly 38% during the Global Financial Crisis. The 2018 Correction and Inflation Shock hit around 31-32%. Even the Covid selloff pulled it down almost 20%. Solid fundamentals don’t eliminate risk. When markets tumble, even steady stocks can take a serious hit.
Picking winners on a consistent basis is not an easy task – especially given the volatility associated with a single stock. Instead, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.