Friday, June 19, 2009

Smuckers Needs More Jam

Smuckers (NYSE:SJM) announced year end results which included Folgers for two quarters and off course make the numbers look very good. The acquisition has added debt which will become a factor in EBITDA over the long run. Just when you start patting management on the back for a job well done you read in their outlook that they really have nothing more to add.

The question becomes will they try to grow by acquisition which is always risky or will organic growth carry the day. My bet is that once the deal making thrill gets you will always welcome the visit from an investment banker who has been hired to peddle something. The risk becomes a deal making risk as opposed to an operating risk which is more easily defined.