J. M. Smucker currently trades at $106 per share and has shown little upside over the past six months, posting a small loss of 3.1%. The stock also fell short of the S&P 500’s 4.7% gain during that period.

Is now the time to buy J. M. Smucker, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free.

We don't have much confidence in J. M. Smucker. Here are two reasons why there are better opportunities than SJM and a stock we'd rather own.

Why Is J. M. Smucker Not Exciting?

Best known for its fruit jams and spreads, J.M Smucker (NYSE:SJM) is a packaged foods company whose products span from peanut butter and coffee to pet food.

1. Long-Term Revenue Growth Disappoints

A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, J. M. Smucker’s sales grew at a sluggish 3.8% compounded annual growth rate over the last three years. This fell short of our benchmark for the consumer staples sector.

2. Previous Growth Initiatives Haven’t Paid Off Yet

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

J. M. Smucker historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5.2%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

Final Judgment

J. M. Smucker isn’t a terrible business, but it doesn’t pass our quality test. With its shares lagging the market recently, the stock trades at 10.5× forward price-to-earnings (or $106 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're fairly confident there are better investments elsewhere. We’d suggest looking at Chipotle, which surprisingly still has a long runway for growth.

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