In Topsy-Turvy Time, Even Record Sales Don’t Generate Excitement

(Bloomberg) -- Reporting big gains in sales and profit used to mean an all-but-guaranteed spot among the S&P 500's top performers.

But in this topsy-turvy earnings season, even record growth isn't always enough to get investors excited. Just ask J.M. Smucker Co.

The maker of Jif peanut butter, Folgers coffee and its namesake jelly on Thursday reported what it labeled “record-setting” sales and profit for the fourth quarter as stuck-at-home consumers snatched up its snacks and pet food. The company estimated that the coronavirus pandemic added $185 million in additional revenue during the period.

Yet its shares fell as much as 4.5% in New York, the biggest intraday drop in more than two months. The company joined others, including Campbell Soup Co. and Colgate-Palmolive Co., that have fallen despite reporting extremely robust demand and sales amid the lockdown conditions.

This illustrates how stock performance has been divorced from some of the traditional indicators of financial health while investors try to figure out how companies will fare once the pandemic passes and shopping patterns normalize.

‘Material Benefit'

J.M. Smucker didn't give investors much confidence in its post-pandemic prospects on Thursday, saying sales will fall as much as 2% in the coming fiscal year. “The outbreak of Covid-19 had a material benefit to fiscal year 2020 results and has caused significant uncertainty for fiscal year 2021 projections,” the company said in a statement.

Campbell also fell the most in more than two months on Wednesday despite projections that higher demand will endure.

On the other hand, some companies are getting a lift when results that would be apocalyptic under normal circumstances aren't quite as bad as anticipated. American Eagle Outfitters Inc. on Wednesday reported a 38% decline in sales and an operating loss of $358 million, while also halting its dividend.

Its shares rose 15%.