J.M. Smucker Co , best known for its peanut butter and jelly, posted higher-than-expected quarterly results, driven by strong margins at its Folgers coffee business, and raised its full-year profit view, sending its shares to a new 52-week high.

Overall gross margin rise to 33.8 percent from 28.9 percent in the year-ago period. About 90 percent of the rise in gross profit was because of Folgers, the company said.

Gross margin at Folgers, the largest producer of retail packaged coffee in the United States, was helped partly by green coffee market conditions and favorable product mix.

Folgers' strong performance has boosted Smucker's results since the company bought the coffee business last November. Folgers' product offerings include the namesake brand, Millstone brand and a license to manufacture and distribute Dunkin' Donuts coffee in the retail grocery market.

Folgers is doing much better than people expected. No doubt commodity costs have been very reasonable, but they are also doing a very good job of running the business, Jefferies analyst Scott Mushkin said.

Mushkin said the company will face tough comparisons next year, but the stock remains very cheap from a price-earnings and discounted cash-flow perspective.

It's a company that is really well run, they've got great brands ... we've been telling people that this is a stock that needs to be owned, the analyst added.

The company's other brands such as Pillsbury flour, Crisco oils and Jif peanut butter, have also performed relatively well in the recession as consumers eat more at home, and have offset weaker sales in the company's foodservice and natural foods businesses.

BLOWOUT QUARTER

For the second quarter ended October 31, the company posted a net income of $140 million, or $1.18 a share, compared with $51.5 million, or 94 cents a share, a year ago.

Excluding items, the company earned $1.22 a share.

Revenue rose 52 percent to $1.28 billion.

Analysts on average expected $1.04 a share, before items, on revenue of $1.24 billion, according to Thomson Reuters I/B/E/S.

Orrville, Ohio-based Smucker raised its full-year 2010 earnings outlook to a range of $3.95 to $4.05 a share, from its previous range of $3.65 to $3.80 a share.

Smucker's shares were up $2.66 at $56.14 in late morning trade Friday on the New York Stock Exchange. They earlier rose 6 percent to a year-high of $56.83.

(Reporting by Mihir Dalal in Bangalore; Editing by Unnikrishnan Nair)

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