Why JM Smucker Stock Dropped 6% This Morning

What happened

Shares of jelly maker JM Smucker (NYSE: SJM) dropped 6% in morning trading Thursday before clawing its way back to close the day with a 2.3% loss. And if you guessed that Smucker must have reported earnings, you're correct.

If you guessed those earnings were a whole lot worse than last year -- well, right again.

So what

At first glance, Smucker's fiscal Q4 2019 results didn't look too bad. There was a slight sales miss, with Smucker's $1.9 billion in Q4 revenue falling just short of analyst predictions for $1.93 billion. Still, those sales were up 7% year over year.

When we get to earnings, the news starts to look significantly worse. On the one hand, Smucker says its "adjusted" earnings per share were $2.08 per share, up 8% year over year and ahead of analysts' predictions of $1.95. Actual GAAP results, however, were an abysmal $0.63 per share -- down 62% year over year, hurt by what management called a "noncash impairment charge related to the Natural Foods business within the U.S. Retail Consumer Foods segment."

For full-year fiscal 2019, sales were also up 7% and GAAP earnings dropped 62% -- to $4.52 per share.

Now what

Next year could be both worse and better. Giving new guidance for fiscal 2020, Smucker management predicted a slowdown in sales growth to just 1% or 2%. On earnings, the company gave no GAAP earnings guidance, but said adjusted earnings per share will range from $8.45 to $8.65. Taken at the midpoint, that would be a 3% increase over the $8.29 per share in adjusted earnings from fiscal 2019.

10 stocks we like better than J.M. SmuckerWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has quadrupled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and J.M. Smucker wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of March 1, 2019

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.