JPMorgan sees major EPS tailwinds for these food producers from new tariff relief
Investing.com -- JPMorgan says newly announced tariff exemptions from the White House could deliver meaningful earnings upside for several major U.S. food producers, with Hershey, Smucker and McCormick positioned to benefit the most.
In a note assessing the changes, the firm’s analyst Thomas Palmer wrote that the executive order exempts agricultural products “most notably cocoa, coffee, and many spices and seasonings,” which could “help to alleviate sizable earnings overhangs from tariffs.”
The analyst highlights Hershey (HSY) as “probably the biggest winner,” noting the company previously flagged a 2025 tariff-related cost impact of $160 million to $170 million and about $200 million in 2026.
The firm says this implied “roughly a $1.30 gross EPS headwind,” largely driven by cocoa, and adds that tariff exemptions “could translate to a $1+ EPS tailwind for HSY in 2026.”
CFO Steve Voskuil recently said, “we’re still seeing cocoa up 70% from where we started the cocoa inflation journey,” emphasising the need for “balanced recovery.”
Smucker (SJM) is also set to benefit, particularly from improved coffee volumes. JPMorgan estimates that the annual tariff impact on SJM was “likely >$0.75,” with much of the relief expected to show up meaningfully in fiscal 2027.
The firm notes SJM’s strategy is to price for coffee inflation and then ease pricing as costs fall.
For McCormick (MKC), tariff relief “could step up” earnings growth next year. The company had been facing $140 million in annual tariff costs, equivalent to about $0.40 per share.
JPMorgan adds that Kraft Heinz, Lamb Weston and Conagra are positioned for smaller, but still material, benefits, while companies exposed to dairy, steel or canned goods are unlikely to see significant relief.
