The J. M. Smucker CompanySJMNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $201.91 per share(market-calibrated)

+76.1%

Upside to Fair Value

Current

$114.68

Pure Model

$227.07

Fair Value

$201.91

Bull Case

$269.88

Bear Case

$194.90

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

0.50%

Calibrated Growth

1.80%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $227.07.

What's Driving This Ratingfor SJM

↓

CapEx normalizing toward maintenance

Historical CapEx is 4.99% of revenue (heavy investment phase). Model fades this to 3.00% by Year 10, freeing up ~$215M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 7.79% — below the sector mature average of 16.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $1.4B (13.31% margin).

→

Moderate revenue growth

Analyst consensus projects 3.70% revenue growth, fading to 2.50% by Year 10. Revenue reaches $10.8B (vs $8.7B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 200bps below the model's 2.50%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 68.60% indicates efficient cash generation. FCF reaches $1.4B by Year 10 (12.72% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.23

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)5.53%

Cost of Debt

Pre-tax Cost of Debt2.83%

Tax Rate21.00%

After-tax Cost of Debt2.24%

Equity Weight (E/V)61.12%

Debt Weight (D/V)38.88%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (61.12% × 5.53%) + (38.88% × 2.24%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$9.0B	$9.3B	$9.7B	$10.1B	$10.8B
EBIT	$705M	$728M	$758M	$1.1B	$1.4B
Tax	$148M	$153M	$159M	$228M	$302M
NOPAT	$557M	$575M	$599M	$857M	$1.1B
+ Depreciation	$473M	$489M	$509M	$528M	$565M
- Capex	$451M	$425M	$399M	$370M	$324M
- Δ NWC	$3M	$2M	$2M	$2M	$3M
Free Cash Flow	$576M	$638M	$707M	$1.0B	$1.4B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$546M	$543M	$541M	$696M	$805M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.4B

Terminal Growth Rate2.50%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$47.0B

PV of Terminal Value$27.5B

Exit Multiple Method

Year 10 EBITDA$2.0B

Exit Multiple (EV/EBITDA)20.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$40.1B

PV of Terminal Value$23.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$6.4B

PV of Terminal Value$27.5B

Enterprise Value$33.9B

(-) Net Debt$7.7B

Equity Value$26.2B

Shares Outstanding106M

Price per Share$246.03

Exit Multiple Method

PV of Projected FCFs$6.4B

PV of Terminal Value$23.5B

Enterprise Value$29.8B

(-) Net Debt$7.7B

Equity Value$22.1B

Shares Outstanding106M

Price per Share$208.11

Pure Model Fair Value

$227.07

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
3.50%	$360.83	$342.76	$325.56	$309.17	$293.56
4.50%	$253.12	$282.09	$325.56	$309.17	$293.56
5.50%	$193.82	$208.07	$227.07	$253.67	$293.56
6.50%	$154.55	$162.70	$172.88	$185.97	$203.42
7.50%	$125.77	$130.87	$137.00	$144.49	$153.84

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$194.90

70.0% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.29

Base Case

$227.07

98.0% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.23

Bull Case

$269.88

135.3% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.30

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Consumer Defensive Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth3.70%

Year 3 Revenue Growth1.75%

Year 5 Revenue Growth1.56%

Year 7 Revenue Growth1.94%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin7.79%

Terminal EBIT Margin16.00%

Tax Rate21.00%

Historical Capex / Rev4.99%

Terminal Capex / Rev3.00%

NWC / Revenue1.05%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 20x EV/EBITDA (Consumer Defensive sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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