SJM: FQ426 First Take—Quarter About in Line, with EPS Upside Helped by Lower Marketing; EPS Guide Strong Anchored by Gross Margin

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SJM: FQ426 First Take—Quarter About in Line, with EPS Upside Helped by Lower Marketing; EPS Guide Strong Anchored by Gross Margin

The J.M. Smucker Company Equity Research

Investment Thesis, Valuation and Risks

The J.M. Smucker Company (SJM)

Investment Thesis

Our Overweight rating is based on our view that SJM's fundamental delivery is unique vs. peers', with underlying volume growth and

relative performance to category. We do not believe this unique delivery is reflected in valuation, which is well below historicals, and

generally in line to below peers'. While a key concern is the Hostess acquisition, historical category growth here is good, and smooth

integration is an upside catalyst.

Target Price Valuation for SJM

Our $125 price target is based on 11.5x our CY27E EPS, below the low-end of SJM's historical 14.5-15.5x range. This factors higher

leverage, continued integration risk in the near term of Hostess, and debates in general on underlying growth of the Food industry,

balanced with the fact that we think the stock could eventually move back toward prior valuation ranges if/as investors gain confidence in

underlying delivery.

Risks to Our Price Target and Rating for SJM

Downside risks include: 1) execution issues related to the integration of Hostess, 2) the inability to offset stranded overhead from the sale

of the pet business and higher interest and administrative costs associated with Hostess, 3) inflationary pressures above SJM's ability to

offset with pricing/productivity, and 4) market volatility causing a rotation away from levered companies.

Companies Mentioned in Report

Company Name Ticker Last Price

(06/08/26)

The J.M. Smucker Company SJM $101.77

Source: Wells Fargo Securities LLC Estimates, FactSet

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