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Strong Q3 Results Send Shares of J.M. Smucker Over 8% Higher Tuesday Morning, but Headwinds Remain

By Daniel Miller - Updated Apr 21, 2019 at 9:06PM

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Improving pricing power and margins will still be challenging.

What happened?

Shares of J.M. Smucker Company ( SJM 1.03% ), a marketer and manufacturer of leading food and beverage brands including Smucker's, Folgers, Jif, Dunkin' Donuts, and Crisco, among many others, popped more than 8% higher Tuesday morning after the company released better-than-expected fiscal third-quarter results.

So what

J.M. Smucker's fiscal third-quarter sales increased 6% to $2.01 billion, topping analysts' estimates calling for $1.99 billion. The company's bottom-line performance was even more impressive, with adjusted earnings per share checking in at $2.26, well above analysts' estimates of $2.01 per share.

Peanut butter and jelly being spread on a slice of bread.

Image source: Getty Images.

"We are pleased with the progress that we made in the third quarter to advance our consumer centric strategy for growth, including increasing contributions from new platforms such as 1850 coffee and Jif Power-Ups snacks," said Mark Smucker, chief executive officer, in a press release. "Our results reflect strong sales across all of our key growth brands, including double-digit increases for Rachael Ray Nutrish, Smucker's Uncrustables, Nature's Recipe, and Sahale Snacks."

Check out the latest J.M. Smuckerearnings call transcript.

Now what

Challenging industry headwinds have made it difficult for management to maintain pricing power and margins. Those challenges led management to double down on pet food and coffee while getting rid of the U.S. baking unit. To further offset headwinds, management will continue focusing on cost management efforts and to deliver synergy and cost savings from acquisitions. Today's better-than-expected result is a positive development for investors, but remember the stock has still shed roughly 18% of its value over the past three years, and it still has a lot of work remaining to improve pricing power and margins in the coming quarters.

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