The suspicion of the presence of salmonella contamination in Natural Peanut Butter Chunky has urged the Ohio-based J.M. Smucker Co. (SJM) to recall thousands of jars distributed in many states.
Smucker had distributed 3000 jars of chunky butter of 16 ounces each in around 25 states. However, about 16000 potentially contaminated jars are still in Smucker’s warehouse.
As per the Food and Drug Administration reports, Smucker believes that the Chunky peanut butter procured from November 8 to November 17, 2011 with the best used date of August 3, 2012 and August 4, 2012, might contain the Salmonella bacteria, which can cause serious and sometimes incurable infections in people.
Smucker thus wants the consumers to dispose off these jars and get the replacement coupon. They can also return it to the stores of Price Chopper, Tops Friendly Markets, Target Corp. (TGT) and Wal-Mart Stores Inc. (WMT), from where the jars were purchased.
Smucker notified that only Natural Peanut Butter Chunky has been affected with this potential Salmonella contamination. However, there are no reports of illness as yet.
Recently, Smucker, which faces stiff competition from ConAgra Foods Inc. (CAG) and Kraft Foods, Inc. (KFT), reported second-quarter 2012 adjusted earnings of $1.29 per share, lagging the Zacks Consensus Estimate of $1.39 and the prior-year quarter’s earnings of $1.38 per share.
Adjusted earnings, excluding one-time costs, however came in at 17 cents and 13 cents per share in the second quarter of 2012 and 2011, respectively, benefited by the company’s buyback program. The result in the quarter also included the operations of Rowland Coffee Roasters Inc. after the completion of the acquisition on May 16, 2011.
Smucker thus has a Zacks #3 Rank, implying a short-term Hold recommendation. On a long-term basis, we provide a Neutral recommendation on the stock.
