The J. M. Smucker Company (SJM): A Bull Case Theory

We came across a bullish thesis on The J. M. Smucker Company on CompanyCharts’s Substack by Charts&Companies. In this article, we will summarize the bull’s thesis on SJM. The J. M. Smucker Company's share was trading at $97.33 as of June 23^rd. SJM’s trailing and forward P/E ratios were 97.33 and 10.99, respectively, according to Yahoo Finance.

JM Smucker (SJM) completed its $5.6 billion acquisition of Hostess Brands in November 2023 and has since recorded multiple goodwill impairment charges related to the deal. These impairments have significantly distorted headline financial metrics like operating and net income, misleading investors about the company’s true performance.

Despite what appears to be poor profitability—such as misleading EPS and net margins—SJM continues to post consistent revenue growth and maintains healthy gross margins. Operational indicators, including COGS, SG&A, and taxes, remain stable, suggesting that the impairment-related losses are accounting-based rather than reflective of core business issues. The company’s EBITDA and cash flow metrics reinforce this view.

While the Hostess acquisition hasn’t delivered the expected returns, SJM’s fundamentals remain intact. The balance sheet now shows total assets growing from $13 billion to $18 billion, mostly due to goodwill, with liabilities at $11.5 billion. Although SJM is trading at a 12-year low in terms of price-to-sales ratio, it still delivers approximately 3% revenue growth across periods. The company’s free cash flow has historically been volatile, but the current price-to-FCF ratio aligns with its long-term median.

EPS and cash from operations have grown modestly since 2010, suggesting financial stability. However, the skewed perception caused by accounting write-downs may keep the stock off conventional screening tools. Ultimately, this isn’t a high-growth story—it’s a case study in how non-cash goodwill impairments can unfairly obscure the real operating strength of a fundamentally solid, cash-generating business.

Previously, we covered a bullish thesis on The J. M. Smucker Company by Kristopher Rymer in January 2025, which highlighted its strong brand portfolio, disciplined capital allocation, and steady cash flows. The company's stock price has depreciated by approximately 11% since our coverage. Charts & Companies shares a similar view but emphasizes how goodwill impairments have distorted key financial metrics.

The J. M. Smucker Company is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 37 hedge fund portfolios held SJM at the end of the first quarter, which was 37 in the previous quarter. While we acknowledge the risk and potential of SJM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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