Smucker Q3 Earnings Beat Estimates, Sales Up 7% on Pricing Gains

The J. M. Smucker Company SJM reported third-quarter fiscal 2026 results, wherein both adjusted earnings and net sales surpassed the Zacks Consensus Estimate. While earnings declined year over year amid elevated green coffee costs and tariff pressures, the company delivered solid top-line growth, supported by pricing actions and strength in its coffee business.

As the operating environment remains dynamic, management continues to prioritize driving organic growth, strengthening margins and maintaining disciplined capital allocation.

SJM’s Quarterly Performance: Key Metrics & Insights

Adjusted earnings were $2.38 per share, beating the Zacks Consensus Estimate of $2.27. However, earnings declined 9% from the prior-year quarter due to higher input costs and tariff expenses.

Net sales were $2,339.4 million, up 7% year over year, and topped the Zacks Consensus Estimate of $2,324 million.

Comparable net sales increased 8%, excluding noncomparable sales from prior-year divestitures and foreign currency exchange. Comparable net sales growth was driven by a 10-percentage-point benefit from net price realization, reflecting higher coffee pricing, partially offset by a 2-percentage-point decline in volume/mix, primarily in sweet baked goods and fruit spreads, partly mitigated by growth in Uncrustables sandwiches.

Adjusted gross profit decreased 3%, reflecting elevated commodity costs — particularly green coffee and tariff expense — along with unfavorable volume/mix. These pressures were partly mitigated by pricing actions.

Adjusted operating income declined 7% year over year, largely due to lower gross profit and the lapping of favorable property tax adjustments in the prior year, partially offset by lower SD&A expenses.

Decoding SJM’s Q3 Segmental Performance

U.S. Retail Coffee: Net sales surged 23% to $908.2 million, benefiting from pricing actions. Net price realization contributed 23 percentage points, primarily across the Folgers, Dunkin’ and Cafe Bustelo brands. Volume/mix declined 1%, reflecting softness in the Folgers and Dunkin’ portfolios, partially offset by gains in Cafe Bustelo. Segment profit declined 5% to $199 million, as higher green coffee costs and tariff impacts more than offset the pricing benefit. 

U.S. Retail Frozen Handheld and Spreads: Net sales rose 2% to $454 million, driven by pricing in Uncrustables sandwiches, while overall volume/mix was neutral. Increases in peanut butter were largely offset by declines in fruit spreads. Segment profit advanced 4% to $103.6 million, benefiting from higher net price realization and lower pre-production expenses associated with the new Uncrustables manufacturing facility, partially offset by higher costs and unfavorable mix. 

U.S. Retail Pet Foods: Net sales declined 1% to $417.1 million, primarily reflecting a 2-percentage-point decline in volume/mix driven by lapping contract manufacturing sales related to divested pet food brands and softness in dog snacks. This was partially offset by growth in cat food. Net price realization was neutral overall, as higher cat food pricing was largely offset by lower pricing in dog snacks. Segment profit increased 4% to $121.9 million, supported by lower marketing expenses.

Sweet Baked Snacks: Net sales decreased 19% to $224.8 million. Excluding noncomparable net sales in the prior year related to the divested Voortman business and certain Sweet Baked Snacks value brands, net sales declined 11%. The decrease was caused by a 10-percentage-point decline in volume/mix across snack cakes, donuts and breakfast products, while pricing was neutral. Segment profit dropped 78% to $12.2 million, reflecting higher costs, an unfavorable mix and increased marketing spend.

International and Away From Home: Net sales increased 12% to $335.3 million. Excluding favorable currency movements, sales also rose 12%, supported by an 11-percentage-point contribution from net price realization, primarily in coffee. Volume/mix was neutral, as increases in Uncrustables sandwiches and coffee were mostly offset by declines in fruit spreads, portion control products, cat food and peanut butter. Segment profit climbed 17% to $72 million, benefiting from pricing gains, partially offset by higher costs, tariffs and unfavorable mix.

SJM’s Financial Health Snapshot

The company ended the quarter with $52.8 million in cash and cash equivalents and $6,841.3 million in long-term debt. Total shareholders’ equity stood at $5,236.1 million.

Cash provided by operating activities was $558.5 million. Free cash flow totaled $487 million, reflecting improved operating cash flow and lower capital expenditures.

What to Expect From SJM in FY26?

Smucker updated its fiscal 2026 outlook to reflect the estimated impact of a recent fire at its Emporia, KS, manufacturing facility. The company now expects net sales to increase 3.5% to 4% versus the prior year, compared with the previous range of 3.5% to 4.5%. This outlook includes a $134.7 million impact related to the divestitures of the Voortman business and certain Sweet Baked Snacks value brands.

Comparable net sales are projected to increase approximately 5% to 5.5%, reflecting higher net price realization, partially offset by a decline in volume/mix, as well as an anticipated $38 million decline in contract manufacturing sales tied to divested pet food brands.

Management continues to envision adjusted earnings per share to range from $8.75 to $9.25. The guidance assumes an adjusted gross profit margin of approximately 35%, and SD&A expenses to be flat-to-slightly down year over year.

Free cash flow is expected to be approximately $975 million, with capital expenditures of $325 million.

Shares of this Zacks Rank #3 (Hold) company have gained 3.3% over the past three months against the industry’s decline of 0.4%.

Stocks to Consider

The Hershey Company HSY, a confectionery product and pantry item company, currently sports a Zacks Rank #1 (Strong Buy). HSY delivered a trailing four-quarter earnings surprise of 17.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hershey’s fiscal 2026 sales and earnings suggests growth of 4.4% and 29.3%, respectively, from the year-ago figures.

Philip Morris International Inc. PM, a tobacco giant, currently carries a Zacks Rank of 2 (Buy). PM delivered a trailing four-quarter earnings surprise of 4.2%, on average.

The consensus estimate for Philip Morris’ current fiscal-year sales and earnings implies growth of 8.6% and 11.9%, respectively, from the year-ago figures.

Ollie’s Bargain Outlet OLLI, a retailer of closeout merchandise and excess inventory, holds a Zacks Rank #2 at present. OLLI delivered a trailing four-quarter earnings surprise of 5.2%, on average.

The Zacks Consensus Estimate for Ollie’s Bargain’s current fiscal-year sales and earnings indicates declines of 16.8% and 17.7%, respectively, from the year-ago figures.

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This article originally published on Zacks Investment Research (zacks.com).

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