Mario Contreras of Deutsche Bank previewed in a research note on Thursday J M Smucker Co (NYSE: SJM)’s upcoming first-quarter results, scheduled for release on August 23.
Contreras is expecting the company to earn $1.82 per share, which is ahead of the consensus estimate of $1.74 and marks an increase from the $1.60 the company earned a year ago.
The analyst stated that he views Smucker “favorably” ahead of the print given its “solid” profitability in its coffee segment and cost savings progress.
On the other hand, Smucker’s pet segment remains “challenged” but the broader pet category is “attractive” on a long-term basis.
Contreras added that investors should focus on Smucker’s coffee fundamentals, especially Dunkin Donuts’ K-cup outlook (Smucker holds the distribution rights in the retail space), pet food trends and competition in heritage products.
The analyst also suggested investors be on the lookout for any new updates on the company’s $100 million incremental fiscal 2017 savings target and total savings target of $250 million by fiscal 2018.
Shares remain Buy rated with a price target raised to $165 from a previous $162, which is based on a discounted cash flow analysis which assumes 2–3 percent sales growth, 4–5 percent EBIT growth, 5–6 percent EPS growth and a 7 percent WACC (weighted average cost of capital).
