J.M. Smucker should satisfy the Enterprising Investor, but not the Defensive Investor. The Defensive Investor is concerned with the low current ratio and the high PEmg ratio, while the Enterprising Investor’s only concern is the level of debt relative to the net current assets. Therefore, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.
From a valuation side of things, the company has grown its EPSmg (normalized earnings) from $3.66 in 2011 to an estimated $5.06 for 2015. This is a very strong and impressive level of demonstrated growth, which is in line with the market’s implied estimate for earnings growth of 6.04% over the next 7-10 years. The ModernGraham valuation model, therefore, returns an estimate of intrinsic value falling within a margin of safety relative to the current price, indicating the company is fairly valued at the present time.
Be sure to check out previous ModernGraham valuations of J.M. Smucker Company (SJM)Â for greater perspective!
Disclaimer: Â The author did not hold a position in J.M. Smucker Company (SJM)Â at the time of publication and had no intention of changing that position within the next 72 hours. Â Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.