Why J.M. Smucker Plunged Today

Key Points

• J.M. Smucker missed third-quarter revenue and earnings estimates.

• While revenue grew, the company's price increases weren't enough to offset the impact from tariff hikes.

• Still, management did raise free-cash-flow guidance, and the stock is fairly cheap.

• 10 stocks we like better than J.M. Smucker ›

Shares of packaged food giant The J.M. Smucker Company (NYSE: SJM) fell on Wednesday, declining as much as 9.3% before recovering to a 5.1% decline as of 1:05 PM EDT.

J.M. Smucker, home to a variety of food brands such as Smucker's, Folgers, and Hostess, gave its fiscal-third-quarter earnings report this morning. The numbers missed expectations, with tariffs especially taking a bite out of the bottom line.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

A tariff-related miss leaves a bitter taste

In the fiscal third quarter, J.M. Smucker's revenue declined 1% to $2.1 billion, although absent the effect of divestitures over the past year, revenue would have actually increased 2%. On a more pessimistic note, adjusted (non-GAAP) earnings per share of $1.90 fell a more severe 22% from the prior year. Both top and bottom lines missed expectations.

But while the quarter came in a bit soft, management actually increased full fiscal year guidance, now expecting full-year revenue to grow between 3% to 5%, compared with 2% to 4% previously. While the earnings-per-share range with $9.00 per share at the midpoint was left unchanged, management also raised guidance for free cash flow by $100 million to $975 million.

The free cash flow uplift was nice to see, but was actually the result of tax benefits in the recently passed "big, beautiful bill." Meanwhile, revenue gains are coming from price hikes, especially on coffee, in response to increased commodity prices, which have been affected by recent tariffs.

Image source: Getty Images.

Tariffs are clearly biting Smucker's profits

While Smucker appears to be raising prices with some success, it doesn't appear the increases are totally compensating for higher commodities and tariff impacts, as evidenced by the decline in earnings. This is especially true in the coffee segment, which makes up about a third of revenue and is the company's largest. Unfortunately, that's where tariffs on green coffee are hurting the most. And the tariff effect will get bigger because President Trump decided to institute a 50% tariff on Brazil at the end of July.

Still, shares trade for a low valuation, at just 11.5 times this year's free-cash-flow guidance with a healthy 4% dividend yield. Assuming tariffs are a one-time cost, and that's not a demanding valuation for investors.

Should you invest $1,000 in J.M. Smucker right now?

Before you buy stock in J.M. Smucker, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and J.M. Smucker wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $661,220!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,114,162!*

Now, it’s worth noting Stock Advisor’s total average return is 1,069% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of August 25, 2025

Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends J.M. Smucker. The Motley Fool has a disclosure policy.