SJM - J.M. Smucker attracts positive outlook from S&P Global Ratings

2023-06-14 06:39:38 ET

S&P Global Ratings issued a positive outlook on The J.M. Smucker Company ( NYSE: SJM ) and said the revision reflects the possibility of an upgrade in the next 12 months to 24 months if the packaged food company sustains leverage around 3X or below.

The ratings agency noted that while J.M. Smucker's ( SJM ) portfolio is relatively less diversified than some of its larger peers, the company has continued to generate strong revenue growth and cash flows. SJM's financial policy of prioritizing cash flow to reduce debt ahead of repurchasing shares was called prudent.

"The company has a track record of reducing debt after acquisitions and management has maintained its commitment to do so. The company generates strong cash flow that continues to support rapid deleveraging. Its target leverage range is 2.5x-3.0x, which we expect the company will maintain, absent a sizable acquisition exceeding $1.7 billion-$1.8 billion."

Looking ahead, S&P expects J.M. Smucker ( SJM ) to opportunistically sell down its Post Hpldings ( POST ) shares within the next 12 month to 24 months to provide the company with additional financial flexibility to fund acquisitions or reduce debt even further.

Shares of J.M. Smucker ( SJM ) fell 0.44% in morning trading to $150.56 vs. the 52-week trading range of $120.52 to $163.07

More on J.M. Smucker:

• Coffee Wars In Recession: Starbucks Vs. The J. M. Smucker
• Valuation metrics on J.M. Smucker
• J.M. Smucker Q1 earnings call transcript
• J.M. Smucker compared to sector peers

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