There's something comforting about a cup of coffee, especially when it helps your stock price perk up. That's the story for The J.M. Smucker Co. (SJM), which saw its shares jump more than 12% on Tuesday after reporting fiscal fourth-quarter 2026 results that beat Wall Street's expectations.

The packaged food company posted adjusted earnings of $2.77 per share, topping the analyst consensus of $2.64. Net sales rose 6% year over year to $2.268 billion, just above the $2.260 billion estimate. Comparable sales also climbed 6%, with pricing actions contributing a 10-percentage-point boost, particularly in coffee and sweet baked goods.

Adjusted gross profit increased 4%, while adjusted operating income jumped 14%. The company credited pricing moves and a favorable product mix for the gains. Operating cash flow improved to $579.2 million from $393.9 million a year earlier, and free cash flow rose to $483.9 million from $298.9 million. The quarter ended with $58.6 million in cash on hand.

Coffee Leads the Way

The star of the show was U.S. Retail Coffee, where sales surged 12% to $830.6 million. Higher prices across the portfolio added a whopping 21 percentage points of growth. Management highlighted continued strength in the Café Bustelo brand and noted that easing commodity pressures should help margins in the coffee segment going forward.

Other segments had mixed results. U.S. Retail Frozen Handhelds and Spreads posted a modest 1% sales increase to $454.1 million, with pricing adding 2 percentage points. The Uncrustables brand continued to gain momentum, and the company expects its transition to a fridge-friendly format to be completed by mid-summer, which should support mid-single-digit growth.

U.S. Retail Pet Foods sales rose 2% to $401.7 million, helped by higher pricing in cat food and dog snacks. Away From Home sales climbed 15% to $228.3 million, with higher coffee prices contributing 8 percentage points and stronger demand for Uncrustables, fruit spreads, and coffee adding another 6 percentage points through volume and mix.

Sweet Baked Snacks, however, remained a weak spot. Sales fell 5% to $237.2 million as volume and mix declined 12 percentage points, led by lower sales of snack cakes and breakfast products. The company said it's focused on improving the Hostess business through cost controls and operational improvements, with a goal of delivering roughly 30% profit growth.

Looking Ahead to Fiscal 2027

For fiscal 2027, JM Smucker expects adjusted earnings of $9.75 to $10.25 per share, compared with analysts' estimates of $9.79. But the sales forecast of $8.689 billion to $8.779 billion came in below the Wall Street consensus of $9.107 billion. Management expects net sales to decline 3% to 4%, citing lower pricing benefits and weaker volume and mix trends.

The company also plans to reduce leverage to about three times EBITDA by fiscal 2027 through roughly $500 million in debt repayments. Management said future share repurchases could follow as leverage declines.

One note of caution: the company warned that the inflation outlook could face pressure from geopolitical risks. Tensions in the Middle East remain a key variable for commodity and transportation costs, creating uncertainty around the company's expense outlook for fiscal 2027, even as green coffee prices moderate.

At the time of publication, JM Smucker shares were up 12.69% at $114.68.