JPMorgan sees major EPS tailwinds for these food producers from new tariff relief

JPMorgan analysts forecast significant earnings upside for several major U.S. food producers, including Hershey (HSY), Smucker (SJM), and McCormick (MKC), due to new White House tariff exemptions on key agricultural products like cocoa, coffee, and spices. Hershey is highlighted as the biggest winner, potentially gaining a $1+ EPS tailwind in 2026 by mitigating a previously projected $200 million tariff-related cost. Smucker is expected to see improved coffee volumes and relief from over $0.75 in annual tariff impact by fiscal 2027, while McCormick could boost earnings growth next year by eliminating $140 million in annual tariff costs.

Analysis

JPMorgan analysts project significant earnings upside for several U.S. food producers following new White House tariff exemptions on key agricultural commodities. The executive order specifically targets cocoa, coffee, and various spices, alleviating substantial tariff-related cost overhangs. Hershey (HSY), Smucker (SJM), and McCormick (MKC) are identified as the primary beneficiaries of this policy shift.

Hershey (HSY) is highlighted as the "biggest winner," potentially gaining a $1+ EPS tailwind in 2026 by mitigating a previously projected $200 million tariff-related cost impact for that year. Smucker (SJM) is expected to see improved coffee volumes and relief from an annual tariff impact likely exceeding $0.75, with meaningful effects anticipated in fiscal 2027. McCormick (MKC) could boost next year's earnings growth by eliminating $140 million in annual tariff costs, equivalent to approximately $0.40 per share.

These exemptions directly address significant cost pressures, such as Hershey's previously flagged $1.30 gross EPS headwind largely from cocoa, which CFO Steve Voskuil noted was up 70%. While Kraft Heinz (KHC), Lamb Weston (LW), and Conagra (CAG) are also positioned for smaller, yet material, benefits, companies exposed to dairy, steel, or canned goods are unlikely to experience similar relief. This policy change offers a direct alleviation of commodity-driven inflation for specific segments of the food industry.

Key Decisions for Investors

• Investors should evaluate the revised earnings outlooks for Hershey, Smucker, and McCormick, particularly considering the quantified EPS tailwinds and cost savings.
• Monitor the timing and full realization of these tariff benefits, especially for Smucker where significant relief is projected for fiscal 2027.
• Consider potential re-rating opportunities for these companies as tariff-related cost overhangs diminish, while acknowledging that other commodity exposures or competitive dynamics remain relevant.