Goldman Sachs Gives Color On J.M Smucker Following Solid Earnings

J.M. Smucker

this morning reported underlying 3QFY11 EPS of $1.37, $0.06 ahead of Goldman's estimate and $0.11 ahead of consensus. Goldman excludes a $0.10 impairment charge in its number. Guidance, ex-impairment, goes to $4.70-$4.75, from $4.55-$4.65 and ahead of the $4.66 consensus estimate. Versus Goldman's estimate this was a top line-driven beat as volume grew 3% on a 4% price gain. While Goldman Sachs was expecting a beat and raise, the magnitude of the upside was better than expected. It is most encouraged by the firm volume results in the face of substantial price increases. Resilience was particularly evident in the coffee segment, where only a modest volume decline was experienced despite a 16% increase in price/mix. Goldman believes this may put some investor concerns regarding elasticity to ease. The company's Crisco business also recovered with volume growth of +27%. Pillsbury baking mixes, however, suffered a 9% volume decline as a result of competitive intensity and the exit of lower-margin products. Goldman Sachs has a Neutral rating on J.M Smucker SJM is trading higher at $65.58