By Rob Otman
JM Smucker (NYSE: SJM) is a $12 billion company today. Investors that bought shares one year ago are sitting on a -19.8% total return. That’s below the S&P 500’s return of 21.88%.
JM Smucker stock is underperforming the market. It’s beaten down, but it reports earnings this week. So is it a good time to buy? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
✗ Earnings-per-Share (EPS) Growth: JM Smucker reported a recent EPS growth rate of -23.29%. That’s below the food products industry average of 28.49%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the food products industry is 30.12. And JM Smucker’s ratio comes in at 16.62. It’s trading at a better value than many of its competitors.
✗ Debt-to-Equity: The debt-to-equity ratio for JM Smucker stock is 75.42%. That’s above the food products industry average of 66.83%. That’s not a good sign. JM Smucker’s debt levels should be lower.
✓ Free Cash Flow per Share Growth: JM Smucker’s FCF has been higher than that of its competitors over the last year. That’s good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✗ Profit Margins: The profit margin of JM Smucker comes in at 7.25% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. JM Smucker’s profit margin is below the food products average of 8.78%. So that’s a negative indicator for investors.
✗ Return on Equity: Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for JM Smucker is 7.82%, and that’s below its industry average ROE of 17.05%.
JM Smucker stock passes two of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Hold With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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