SJM, THE J. M. Smucker Company
We operate principally in one industry, the manufacturing and marketing of branded food and beverage products on a worldwide basis, although the majority of our sales are in the United States.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, drawn from its own SEC filings. The lens to bring to the numbers below, not the answer.
- What it is
- A consumer-brand business, where the durable asset is the brand and the pricing power it commands.
- Situation
- Unprofitable growth. no operating profit yet, judge it on revenue growth, gross-margin trajectory, cash burn and runway, never on an earnings multiple. Cyclical. margins collapse repeatedly across the cycle, a single year misleads; look at normalized, through-cycle earnings and the balance sheet at the trough.
- What moves the needle
- Pricing power, the surest mark of a moat. What decides it: whether it can raise prices with inflation and not lose the customer, whether the brand still earns its place on the shelf, and whether volume holds when a cheaper rival appears. On its own account, the filing leans hardest on customer concentration, set against the numbers in what the filing emphasizes, below.
- Is it a good business?
- Return on capital has rarely cleared the cost of capital (median 6%, above 15% in 0 of 10 years). Owner earnings agree: roughly 10% of revenue reaches owners as cash, consistently. The cycle and the balance sheet decide this one, so weigh the worst year against the median, and read the 10-K.
No model wrote a word of this. Every line is arithmetic on the company's filings, shown in full in the sections below; the judgment is yours.
Where the money comes from
read the 10-K →5% of revenue comes from outside the United States.
- United States95%$8.6B
- International5%$483M
- Canada4%$341M
- All other international2%$142M
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2017–2026
realized figures from each filing, no estimates| 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | 2026’26 | TTMTTMApr 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $7.4B | $7.4B | $7.8B | $7.8B | $8.0B | $8.0B | $8.5B | $8.2B | $8.7B | $9.1B | $9.1B |
| Gross marginGross mgn | 38% | 39% | 37% | 38% | 39% | 34% | 33% | 38% | 39% | 34% | 34% |
| Operating marginOp. mgn | 14.1% | 14.2% | 11.8% | 15.7% | 17.3% | 12.8% | 1.8% | 16.0% | −7.7% | 4.0% | 4.0% |
| Net incomeNet inc. | $592M | $1.3B | $514M | $780M | $876M | $632M | ($91M) | $744M | ($1.2B) | ($139M) | ($139M) |
| EPS (diluted)EPS | $5.12 | $11.85 | $4.55 | $6.87 | $7.82 | $5.83 | — | — | — | — | $-1.30 |
| Owner earningsOwner earn. | — | $896M | $781M | $986M | $1.3B | $719M | $717M | $643M | $817M | $1.2B | $1.2B |
| ROICROIC | 6% | 8% | 5% | 7% | 8% | 6% | 1% | 6% | -4% | 2% | 2% |
| Cash & investmentsCash+inv | $167M | $193M | $101M | — | — | — | — | — | — | — | $97M |
| Net debt / (cash)Net debt | $4.8B | $4.5B | $5.4B | $5.4B | $4.7B | $4.3B | $4.3B | $7.8B | $7.0B | $6.5B | $6.4B |
| Dividends / shareDiv/sh | $2.94 | $3.10 | $3.34 | $3.50 | $3.60 | $3.86 | — | — | — | — | — |
| Book value / shareBVPS | $59.26 | $69.83 | $70.47 | $72.23 | $72.54 | $75.09 | — | — | — | — | $51.86 |
Owner’s Scorecard
Will it survive?
- AdequateOperating income $360M ÷ interest expense $81M
Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.
- How heavy is the debt? 18.2×HighTotal debt $6.5B ÷ operating income $360M
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $6.4BHeavy net debtCash $101M − debt $6.5B
Netting $101M of cash and short-term investments against $6.5B of debt leaves $6.4B owed, about 17.9× a year's operating profit, versus the gross figure above. It also holds $48M in longer-dated marketable securities; counting those, it sits at $6.4B of net debt. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- TightDSO 26 + DIO 68 − DPO 71 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- Below averageNOPAT $285M ÷ invested capital $12.0B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- SolidOwner Earnings $1.2B = operating cash $1.5B − capex $317M
What an owner could take out without starving the business. That's 13% of revenue. Treating stock comp as the real expense it is (less $24M of SBC) leaves $1.1B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Loss, but cash-generativeNet income ($139M) · cash from operations $1.5B
The company reported a net loss, so a conversion ratio isn't meaningful. What matters then is whether operations still threw off cash, here, they did.
How is the cash used?
- Returns about halfDividends + buybacks $470M ÷ Owner Earnings $1.2B
Of $1.2B Owner Earnings, $470M (41%) went back to shareholders, $465M dividends, $6M buybacks. But the buybacks barely exceed stock issued to employees ($24M SBC), net of dilution, little was truly returned. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? —Not enough data
The filing data didn't include the inputs for this check.
Durability & moat, 2017–2026
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 7 of 10
Lost money in 3 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 0 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 14% (FY2017) → 4% (FY2026)
Margins slipped over the record, competition or costs are biting in.
- Reinvestment, incremental ROIC returns capital
The capital base barely grew: this business returns cash through dividends and buybacks rather than reinvesting. Judge it on the cash returned, not on compounding.
- Owner earnings growth +2%/yr
Free cash to owners grew about 2% a year over the record.
- Worst year 2025 · −7.7% op. margin
Operations went underwater in 2025, understand why before trusting the good years.
- Share count −0.7%/yr
The share count is shrinking, buybacks are quietly growing your slice of the business.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2018–2026
Over the record, the business generated $11.4B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$3.5B · 30%
- Dividends$3.7B · 33%
- Buybacks$1.7B · 15%
- Retained (debt / cash)$2.5B · 22%
It reinvested $3.5B (30%) back into the business and returned $5.4B (48%) to owners, $3.7B in dividends, $1.7B in buybacks. Total debt rose $1.9B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio138:1
What the chief earns for every dollar the median employee makes, per the 2025 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$24M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 7% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
2 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $9.1B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity MissCurrent ratio ≥ 2× · 0.78×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $6.5B vs ($565M) WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability MissA profit every year (10-yr record) · 3 loss years
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record PassUninterrupted dividends · paid every year (10)
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth MissEarnings +33% over the record · −126%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $-1.28/share and book value $51.14/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what THE J. M. Smucker Company has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $1.2B on 107M diluted shares; net debt $6.4B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2026
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Customer concentrationBusiness
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“During 2026, our top 10 customers, collectively, accounted for approximately 60 percent of consolidated net sales.”
From the recordRevenue exposed (TTM)$9.1B - Pricing power & competitionRisk Factors
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“In particular, technology-based systems, which give consumers the ability to shop through e-commerce websites and mobile commerce applications, are also significantly altering the retail landscape in many of our markets and intensifying competition by simplifying distribution and lowering barriers t…”
From the recordOperating margin4.0% now (TTM), off a 17.3% peak (FY2021) - Supplier & input dependenceRisk Factors
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“We have elected to source certain raw materials, such as packaging for our Folgers coffee and Jif peanut butter brands, certain finished goods, such as K-Cup pods, our Pup-Peroni dog snacks, and liquid coffee, from primary or single sources of supply.”
From the recordGross-margin cushion (TTM)34% - Concentrated dependenceBusiness
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Supermarkets, warehouse clubs, and food distributors continue to consolidate, and we expect that a significant portion of our revenues will continue to be derived from a limited number of customers.”
From the recordOwner-earnings margin at stake (TTM)13% - Debt terms & refinancingRisk Factors
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“The obligations of the financial institutions under our revolving credit facility are several and not joint and, as a result, a funding default by one or more institutions does not need to be made up by the others.”
From the recordBalance sheet (TTM)$6.4B heavy net debt · interest covered 4.4× - Litigation & contingenciesMD&A
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“We are defendants in a series of putative class action lawsuits that were transferred to the United States District Court for the Western District of Missouri for coordinated pre-trial proceedings.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandRisk Factors
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“Consumers may be less willing or able to pay a price differential for our branded products and may increasingly purchase lower-priced offerings or may forego some purchases altogether, especially during economic downturns or instances of increased inflationary pressures.”
From the recordWorst year on record−7.7% operating margin (FY2025)
What changed, FY2026 vs FY2025
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “Operating income (loss) increased $1,034.1, primarily reflecting a $1.0 billion decrease in impairment charges related to the goodwill of the Sweet Baked Snacks reporting unit and the Hostess brand trademark, the lapping of a $310.1 net pre-tax loss on divestitures in the prior year, and a $32.4 dec…”
- “The $263.2 increase in cash provided by operating activities in 2026 was primarily driven by a decrease in cash used for income and other taxes, primarily reflecting the timing of income tax payments and lower taxable income, as well as lower working capital requirements in 2026, partially offset by…”
- “The cash required to fund working capital decreased compared to the prior year, primarily driven by lower inventories, reflecting moderation in input cost inflation during the current year, the timing of settling our derivative instruments, and a reduction in payments related to transition services …”
- “While this adjusted effective income tax rate does not generally differ materially from our GAAP effective income tax rate, certain exclusions from non-GAAP results, such as the unfavorable tax impact associated with the impairment charges for the Sweet Baked Snacks reporting unit, can significantly…”
- “Governmental regulation and policies encompass such matters as ingredients (including whether a product contains bioengineered ingredients, artificial dyes, and ingredients that are generally recognized as safe), packaging and disposal of packaging, labeling (including use of certain terms such as s…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Packaged food
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| KHCKraft Heinz Co | $24.9B | 33% | -18.7% | -6% | 15% |
| SJMTHE J. M. Smucker Company | $9.1B | 34% | 4.0% | 2% | 13% |
| MZTIMarzetti Co. | $1.9B | 24% | 11.5% | 21% | 11% |