The Wife of The J.M. Smucker Company (SJM)’s Chairman of the Board Bought 1,000 Shares

Other food companies include Campbell Soup Company (NYSE:CPB), Kellogg Company (NYSE:K), ConAgra Foods, Inc. (NYSE:CAG), and Mondelez International Inc (NASDAQ:MDLZ). Campbell and Mondelez International Inc (NASDAQ:MDLZ)feature trailing earnings multiples in the 18-19 range, so quite close to where The J.M. Smucker Company (NYSE:SJM)trades- their forward P/Es are also in line with what we saw at that company. Each of these stocks also features a beta of 0.5 or lower, making them competitive from a defensive perspective as well. However, their bottom lines have not been holding up as well. Specifically, Campbell Soup Company (NYSE:CPB) experienced a 2% increase in earnings last quarter compared to a year ago, despite significantly higher sales growth, while Mondelez International Inc (NASDAQ:MDLZ)’s operating income declined (earnings results aren’t quite comparable due to the breakup of what was Kraft Foods).

Kellogg Company (NYSE:K) and ConAgra Foods, Inc. (NYSE:CAG) are in a more complex position from an earnings perspective: they carry forward P/Es of 15 and 13, respectively, making them priced about even to slightly lower than the other three companies we’ve discussed here, but those figures depend on significant improvement in their businesses given that their valuation represents a steep premium over their peers. Once again these companies are somewhat insulated from the broader economy, with betas in the 0.4-0.5 range, and they both offer dividend yields of about 3% as well. Revenue has been rising at double-digit rates for both Kellogg Company (NYSE:K) and ConAgra Foods, Inc. (NYSE:CAG), going by recent quarterly reports, but at least thus far earnings have been down and management would have to reverse that to put these companies on track towards their peer group.

We like that over the past year The J.M. Smucker Company (NYSE:SJM) was generally able to increase both its revenue and net income, but we would be a bit concerned about sales results in its most recent quarter. While growth seems generally high enough that it might be able to justify its current valuation, the company is dependent on an expanding business and any sign that might not occur would be reason enough to avoid the stock.

Disclosure: I own no shares of any stocks mentioned in this article.