SJM
J.M. Smucker ($SJM) Director Buys the Dip Alone as CEO Sold $11M Before Plunge
06/12/2025 21:48
Sentiment
Summary
- Director Tarang Amin purchased 1,050 shares at $96.09 amid J.M. Smucker's 15.6% post-earnings plunge, signaling strong bottom conviction
- Contrasts with other executives' sales at $110-$116 range, as Amin remains sole buyer during decline phases
- Coffee segment surged 10.9% while Pet Foods (-12.6%) and Snacks (-25.5%) segments dragged overall performance
POSITIVE
- Director Amin's consecutive purchases signal insider confidence, especially bottom-buying post-earnings represents strong positive signal
- Coffee segment's 10.9% growth amid rising arabica prices expands margins, with industry expecting 15-25% additional increases
- Attractive 4.51% dividend yield and forward P/E of 9.4x indicate undervaluation with defensive appeal
- Strong $1.21 billion operating cash flow supports dividend sustainability with defensive beta of 0.33
NEGATIVE
- Major executive sales totaling $18 million raise questions about management confidence in company prospects
- Sharp declines in Pet Foods (-12.6%) and Snacks (-25.5%) core segments create portfolio imbalance concerns
- High debt-to-equity at 126% and low current ratio of 0.81 indicate excessive leverage and liquidity constraints
- Q4 revenue declined 2.8% missing estimates, reflecting continued growth momentum deceleration
Expert
From a consumer staples perspective, Smucker's situation reflects typical legacy brand transition challenges. While coffee segment benefits from commodity price increases provide near-term tailwinds, structural weakness in pet foods and snacks reflects changing consumer trends and intensified competition. Divergent insider trading patterns suggest varying segment outlooks, while high dividend yield reflects mature company shareholder return policy.
Previous Closing Price
$97.37
+1.50(1.56%)
Average Insider Trading Data Over the Past Year
$114.87
Purchase Average Price
$112.3
Sale Average Price
$100.51K
Purchase Amount
$2.67M
Sale Amount
Transaction related to News
Trading Date | Filing Date | Insider | Title | Type | Avg. Price | Trans. Value |
|---|---|---|---|---|---|---|
06/13/2025 | 06/13/2025 | Sale | $ |
Amid J.M. Smucker's ($SJM) 15.6% plunge following earnings, Director Tarang Amin purchased 1,050 shares at $96.09, sending a strong bottom signal. This marks his second purchase following a 875-share buy at $114.87 in March, showing a pattern of increasing conviction as prices fall. J.M. Smucker, founded in 1897, is a leading American food conglomerate owning essential household brands including Folgers coffee, Jif peanut butter, Smucker's jams, and Hostess snacks. The company dominates the coffee market with Folgers and Dunkin' brands, currently benefiting from rising arabica bean prices. However, other insiders moved differently. CEO Mark T. Smucker sold $11 million worth of shares at $110.16 last June, while CFO Marshall Tucker H. executed two sales totaling $5.7 million in December and March at $113.00-$113.36. CLO Jeannette L. Knudsen and Officer Jill R. Penrose also sold stakes worth $290,000 and $590,000 respectively in March at $110.55-$116.26, all 15-20% above current levels. Amin's contrarian stance stands out. A McKinsey alum and seasoned consumer goods director since 2019, his purchases coincide with sharp declines, particularly this latest buy immediately after earnings drove shares to $95.87. Q4 results indeed disappointed. Revenue fell 2.8% to $2.14 billion, missing the $2.19 billion estimate. Pet Foods (-12.6%) and Sweet Baked Snacks (-25.5%) segments dragged performance, while Coffee surged 10.9% to $738.6 million with segment profit of $211.2 million significantly exceeding the $182.9 million estimate. With arabica prices nearly doubling year-over-year, major roasters like Smucker are expanding margins through price increases. Industry expects 15-25% additional coffee price hikes this year, suggesting continued Coffee segment strength. Financial health shows mixed signals. High debt-to-equity at 126% and low current ratio of 0.81 raise liquidity concerns, yet the company generates $1.21 billion in operating cash flow and $647 million in free cash flow. The attractive 4.51% dividend yield and defensive beta of 0.33 appeal to income-focused investors. Shares trade 22% below the 52-week high of $125.42, with forward P/E of just 9.4x indicating undervaluation. High institutional ownership at 88% reflects continued fundamental confidence. Key investment drivers remain clear: sustained Coffee growth versus Pet Foods/Snacks recovery. Hostess acquisition synergies and resolution of RFK Jr.'s anti-processed food policy concerns could trigger valuation re-rating. Whether Amin's contrarian bets reflect personal conviction or insider knowledge of improving fundamentals awaits future earnings validation. However, the combination of high dividend yield and undervaluation merits attention from defensive portfolio builders.
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