McCormick & Company Reports Strong Earnings Amid Market Challenges
Hunt Valley, Maryland-based McCormick & Company, Incorporated (MKC) is a leading manufacturer, marketer, and distributor of spices, seasonings, specialty foods, and flavors to the food industry. With a market cap of $20.2 billion, McCormick operates in over 150 countries and territories, establishing its brands as top choices in many markets.
Stock Performance Falls Short of Market Gains
In the past year, McCormick’s stock prices have lagged behind the overall market trends. In 2024, shares have risen by 10.1%, while the past year shows a growth of 13.5%. In contrast, the S&P 500 Index ($SPX) saw significant increases of 24.1% in 2024 and 31.1% over the last 52 weeks.
Outperforming Industry ETF
Despite this, McCormick has fared better than the First Trust Nasdaq Food & Beverage ETF (FTXG), which has seen a 2.1% decline year-to-date and only a 1.6% gain in the last year.
Positive Earnings Released
On October 1, McCormick’s stock prices surged 2.2% following its impressive Q3 earnings report. Although demand has softened and the macroeconomic environment in China has negatively impacted the volume in the APAC region, the company achieved global positive volume growth. Improvements were noted in both the Consumer and Flavor Solutions segments, with expectations to carry this momentum into Q4. McCormick’s total net sales remained steady at $1.7 billion, consistent with the same quarter last year, impacted by its strategic decision to divest its canning business and reduce pricing.
Significant EPS Growth
McCormick’s adjusted earnings per share (EPS) grew by an impressive 27.7% year-over-year, reaching $0.83, which surpassed analysts’ expectations by 22.1%. This growth is attributed to the strong performance of its largest joint venture, McCormick De Mexico, as well as discrete tax benefits and increased income from unconsolidated operations.
Analysts Predict Continued Growth
For the current fiscal year ending in November, analysts forecast an 8.2% year-over-year growth in adjusted EPS, predicting it will reach $2.92. McCormick has a strong track record, having consistently exceeded analysts’ earnings estimates in recent quarters.
Current Analyst Ratings
MKC stock currently holds a consensus “Moderate Buy” rating. Among the 12 analysts covering McCormick, five recommend a “Strong Buy,” six suggest “Hold,” and one advises a “Strong Sell.”
Revised Analyst Sentiment
This outlook is notably more optimistic than two months ago when the consensus was a “Hold” rating, with four recommending “Strong Buy” and two advising “Strong Sell.”
Target Price Increases
On October 2, Bank of America (BAC) analyst Peter Galbo affirmed a “Buy” rating and raised the price target to $96, indicating a potential upside of 27.5%. Additionally, the mean price target for MKC is $85.85, reflecting a 14% premium over current prices.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here. More news from Barchart
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
