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J.M. Smucker Updates 1 Key Risk Factor
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J.M. Smucker Updates 1 Key Risk Factor

Shares of branded food and beverage products provider The J. M.  Smucker Co. (SJM) have gained 21% over the past year. Its recent second-quarter results exceeded expectations on the back of organic growth, higher demand, pricing actions, and higher comparable sales.

Revenue at $2.05 billion exceeded analysts’ estimates by $90.7 million, while earnings per share at $2.43 beat expectations by $0.38.

Furthermore, SJM sold its private-label dry pet food business to Diamond Pet Foods for a consideration of $33 million. The move allows SJM to focus on its pet food and pet snacks business, and drive category growth in dog snacks.

In a continued portfolio optimization drive, SJM has also agreed to sell its natural and organic beverage and grains businesses to Nexus Capital Management for $110 million. The transaction is expected to close in Q3 fiscal 2022.

 With these developments in mind, let’s have a look at what’s changed in SJM’s key risk factors that investors should know.

Risk Factors

According to the TipRanks Risk Factors tool, J.M. Smucker’s top two risk categories are Production and Ability to Sell, contributing 36% and 29% to the total 28 risks identified, respectively. Compared to a sector average of 17%, SJM’s Production risk factor is at 36%.

In its recent quarterly report, the company has changed one key risk factor under the Macro & Political risk category.

SJM highlighted the potential adverse impact due to the COVID-19 pandemic and its associated implications on its business and results of operations. Factors such as changes in consumer behavior, retailer inventory levels, cost inflation, manufacturing and supply chain challenges, vaccination rates and effectiveness, and the impact of government vaccination requirements could affect the company.

Amid these factors, any difficulty in raising capital, higher regulatory restrictions, or continued market volatility could affect SJM’s ability to implement pricing actions or execute strategic business activities such as acquisitions and divestitures.

Hedge Fund Activity

According to TipRanks data, Wall Street’s top hedge funds have increased holdings in J. M. Smucker by 12.7 thousand shares in the last quarter, indicating a neutral hedge fund confidence signal in the stock based on activities of eight hedge funds in the recent quarter. Significantly, Ray Dalio’s Bridgewater Associates has added SJM shares worth $24.3 million to its portfolio.

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