J.M. Smucker kills estimates in Q1

Yet, if this is the case, then one might expect private-label brands to put pressure on name brands such as Smucker. Obviously, the company is holding its own. Brand equity can certainly pay off, not only for Smucker but for colleagues such as Kraft (NYSE: KFT) and ConAgra (NYSE: CAG).

Now, however, I must make mention of some bad points. According to the press release, the top line, excluding the effect of the Folgers acquisition and the influence of the currency markets, decreased 1%. Not a huge drop, but a drop nevertheless. And cash was used for operations during the quarter. In last year's Q1, cash was generated from Smucker's businesses. I never like it when cash flow is not positive, but I'll take management's word that investors should keep in mind that this is just the first quarter and that cash flows should improve later on in the fiscal year. I see the point: at the moment, the company wants to build inventories for the upcoming fall/winter selling season, including stock related to coffee (management said this latter activity was a prudent move ahead of the Atlantic hurricane cycle).

In general, I think Smucker did well during Q1, and I expect it to keep the fundamental momentum at a strong level. I like the brand mix, I believe the margins will be attractive going forward, and I am bullish on the ability of the Folgers acquisition to create value over the long term. Shares of Smucker closed higher on Friday by over 4%. They're near a 52-week high. I am of the opinion that they may be going higher still.

Disclosure: I don't own any company mentioned; positions can change without notice.