Hunt Valley, Maryland-based McCormick & Company, Incorporated (MKC) manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. With a market cap of $22.4 billion, McCormick operates through Consumer and Flavor Solutions segments. The packed foods giant is expected to announce its Q3 earnings before the market opens on Tuesday, Oct. 1.
Ahead of the event, analysts expect McCormick to report a profit of $0.68 per share, up 4.6% from $0.65 per share reported in the year-ago quarter. The company consistently surpassed or matched Wall Street’s EPS expectations in each of the past four quarters. Its EPS for the last reported quarter grew by 15% year-over-year to $0.69, exceeding the consensus estimates by 17%.
Looking ahead to fiscal 2024, analysts expect McCormick to report an EPS of $2.85, up 5.6% from $2.70 in fiscal 2023. Furthermore, in fiscal 2025, its EPS is expected to grow 7.4% year-over-year, reaching $3.06.
MKC is up 21.7% in 2024, outpacing the S&P 500 Index’s ($SPX) 20.3% gains and the Consumer Staples Select Sector SPDR Fund’s (XLP) 15.3% returns on a YTD basis.
Shares of McCormick soared 4.3% after its Q2 earnings release on Jun. 27. Despite a slight dip in net sales, the company’s adept cost management strategies led to notable margin expansions and enhanced profitability. Its cost of goods sold decreased by 1.9% year-over-year, resulting in a 61-basis point increase in gross margin to 37.7% and a modest rise in gross profit to $619.6 million.
Additionally, a reduction in special charges and tax expenses, coupled with increased income from unconsolidated operations, primarily driven by the robust performance of McCormick de Mexico, the company’s largest joint venture, contributed to a significant net margin expansion of 2%, reaching 11.2%. This resulted in an impressive 21.1% year-over-year surge in net income, totaling $184.2 million.
The consensus opinion on MKC stock is neutral, with an overall “Hold” rating. Out of the 12 analysts covering the stock, four suggest “Strong Buy,” six recommend “Hold,” and two advise “Strong Sell” rating.
Although MKC is trading above its mean price target of $80.28, the Street-high target of $95 suggests a potential upside of 14.1% from current price levels.
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 is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
