On Thursday, J.M. Smucker (NYSE:SJM) will release its latest quarterly results. The company best known for its jams and peanut butter has seen its stock make great strides this year, but will its fundamentals back up the big run in its share price?

Smucker appeals to investors' recent desire for defensively oriented stocks that solid dividend yields. Yet the food company hasn't shied away from efforts to make its business grow faster. Let's take an early look at what's been happening with J.M. Smucker over the past quarter and what we're likely to see in its quarterly report.

Stats on J.M. Smucker

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$1.34 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Smucker deliver some tasty earnings this quarter?
Analysts have been guardedly optimistic about Smucker's future earnings, holding their estimates for the April quarter stable but adding $0.02 per share to their fiscal 2014 calls. That assessment has satisfied investors, with the stock having gained almost 8% since the end of February.

Smucker is a popular giant in the makings of a good peanut-butter and jelly sandwich, with Jif peanut butter and Smucker's jams and jellies having a strong presence in the processed food industry. The company has done a good job of keeping its margins relatively high, as it easily eclipses Peter Pan peanut butter-maker ConAgra (NYSE:CAG), which has a broader line of lower-margin products that don't benefit as much from brand-name premium pricing.

But the big growth area for Smucker is coffee, and recently, Smucker has benefited from falling coffee prices. The company, which owns the Folger's coffee brand as well as having a licensing agreement with Dunkin' Brands to sell Dunkin' Donuts packaged coffees, hasn't been able to hang onto all of the potential margin-enhancing gains from the price decrease, as it decided in February to pass on some of those savings to consumers in a 6% price cut. Competitors quickly followed, with Kraft Foods (NASDAQ:KRFT.DL) cutting Maxwell House prices by about 6%, and Starbucks (NASDAQ:SBUX) followed suit with a 10% to 13% cut on its grocery-store offerings.

Still, one concern that Smucker's investors have to face is that valuations have gotten somewhat extended. Paying 22 times trailing earnings for a stock with expected 10% growth in earnings per share reflects the premium that investors have put on low-volatility stocks, and as a result, the usual margin of safety in consumer-oriented stocks like Smucker isn't there right now.

In Smucker's report, watch for how the company plans to foster growth going forward. Without some innovative ideas, Smucker isn't likely to produce enough growth to support all of its stock's recent climb, especially if interest rates rise and start making its 2% yield look less attractive to income investors.

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