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 $20.2 billion, McCormick’s operations span over 150+ countries and territories across the globe and its iconic brands command leading share positions in many of these markets.
The flavors giant has lagged behind the broader market over the past year. McCormick stock prices have gained 10.1% in 2024 and 13.5% over the past year lagging behind the S&P 500 Index’s ($SPX) surge of 24.1% in 2024 and 31.1% over the past 52 weeks.
However, when compared to an industry-focused ETF McCormick has outperformed the First Trust Nasdaq Food & Beverage ETF’s (FTXG) 2.1% decline on a YTD basis and 1.6% gains over the past 52-week period.
McCormick’s stock prices rose 2.2% after the release of its impressive Q3 earnings on Oct. 1. Despite the softness in demand and challenging macro environment in China which adversely impacted McCormick’s APAC region’s volume, the company delivered total global positive volume growth, showcasing improved trends across its Consumer and Flavor Solutions Segments and expects to continue this momentum into Q4. McCormick’s topline was impacted by its strategic decision to divest its canning business and decrease in pricing. Nevertheless, the company’s net sales remain consistent at $1.7 billion same as the year-ago quarter.
Meanwhile, McCormick’s adjusted EPS grew by a massive 27.7% year-over-year to $0.83, exceeding analysts’ forecasts by a staggering 22.1%. The growth was primarily driven by the strong performance of the company’s largest joint venture, McCormick De Mexico, discrete tax benefits, and higher income from unconsolidated operations among others.
For the current fiscal year, ending in November, analysts expect McCormick to report an 8.2% year-over-year growth in adjusted EPS to $2.92. Moreover, the company has a robust earnings surprise history. It has surpassed analysts' bottom-line estimates in each of the past quarters.
MKC stock has a consensus “Moderate Buy” rating overall. Out of the 12 analysts covering the stock, five recommend “Strong Buy,” six advise “Hold,” and one suggests a “Strong Sell” rating.
This configuration is substantially more bullish compared to two months ago, when 12 analysts had a consensus “Hold” rating overall, among which four recommended “Strong Buy,” and two advised a “Strong Sell” rating.
On Oct. 2, Bank of America (BAC) analyst Peter Galbo maintained a “Buy” rating while raising the price target to $96, which suggests a massive potential upside of 27.5%. Meanwhile, MKC’s mean price target of $85.85 represents a premium of 14% to current price levels.
