J M Smucker Stock Jammed by Ugly Sales Outlook

SJM calls are all the rage today though

Deputy Editor
Jun 4, 2020 at 2:40 PM
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The shares of J M Smucker Co (NYSE:SJM)  are down 4.2%, last seen trading at $109.09, despite the food and beverage manufacturer reporting fiscal fourth-quarter profits of $2.57 on revenue of $2.09 billion. Both top-line results were higher than analysts' estimates, thanks to increased consumer demand resulting from the coronavirus pandemic. Instead, weighing on SJM is a forecasted a 1% to 2% decline in sales for fiscal 2021 due in part to weakness in its "away from home" business.

J M Smucker stock has tacked on nearly 20% since its mid-March annual low of $91.88, and over the last three months has distanced itself from the year-to-date breakeven level. Year-over-year, however, the stock is still off by 12.2%. The good news is support seems to have emerged at the $108 level, an area that coincides with the shares' 160-day moving average.

SJM Chart 2 June 4

Still, the options pits are singing a different tune post-earnings. So far today 2,199 calls and 940 puts have changed hands, total options volume that is five times the average intraday amount, and sitting in the 98th percentile of its annual range. The most popular today is the June 110 call, with new positions being opened. Buyers of these call see the $110 level as serving as a floor for SJM in the coming weeks, when the options expire. 

The appetite for calls is nothing new. SJM sports a 10-day call/put volume ratio of 4.31 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), which ranks in the lofty 88th percentile of its annual range. This high percentile suggests a healthier-than-usual appetite for calls of late.

Analysts, however, are skittish on the equity. There are nine in coverage, and all sport "hold" or "strong sell" ratings. Meanwhile, the stock's 12-month consensus price target of 114.54 is an uninspiring 4.2% premium to current levels.


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