McCormick & Company (MKC) AI Stock Analysis

• Market Cap: $20.36B
• Dividend Yield: 2.37%
• Average Volume (3M): 2.75M
• Price to Earnings (P/E): 26.1
• Beta (1Y): 0.19
• Revenue Growth: 0.40%
• EPS Growth: 10.89%
• Country: US
• Employees: 14,100
• Sector: Consumer Defensive
• Sector Strength: 86
• Industry: Packaged Foods
• EPS (TTM): 2.91
• Shares Outstanding: 252,681,730
• 10 Day Avg. Volume: 2,974,932
• 30 Day Avg. Volume: 2,754,162
• PEG Ratio: 2.39
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.20
• Price to Cash Flow (P/CF): 11.70
• P/FCF Ratio: 10.80
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $85.00
• Price Target Upside: 11.99% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

McCormick & Company presents a solid financial foundation with strong profitability and efficient operations. Technical indicators show mild upward momentum, although the high P/E ratio suggests potential overvaluation. The company's earnings call highlights growth and confidence in its strategies despite facing certain market challenges.

Positive Factors

Consumer demand trends

McCormick is set to benefit from trends favoring scratch cooking and private label products, with its core portfolio supporting these shifts and leading in private label spices.

Health and wellness trends

McCormick is viewed as the biggest beneficiary of health and wellness trends among larger food companies.

Productivity savings

Robust productivity savings from their Continuous Cost Improvement program are expected to drive strong gross margin expansion and provide sufficient cushion to achieve guidance for operating profit growth.

Negative Factors

Earnings performance

The Consumer division delivered organic growth of only 1% and profit decreased by 17%.

Flavor Solutions performance

Flavor Solutions has been weaker than expected, especially with big packaged foods customers.

Tariff impact

Tariffs on Mexico would present a cost headwind to the company's hot sauce business given that the U.S. imports 90% of its chili peppers with most coming from Mexico.

McCormick & Company Business Overview & Revenue Model

Company Description

McCormick & Company, Incorporated manufactures, markets, and distributes spices, seasoning mixes, condiments, and other flavorful products to the food industry. It operates in two segments, Consumer and Flavor Solutions. The Consumer segment offers spices, herbs, and seasonings, as well as condiments and sauces, and desserts. This segment markets its products under the McCormick, French's, Frank's RedHot, Lawry's Cholula Hot Sauce, Gourmet Garden, Club House, and OLD BAY brands in the Americas; Ducros, Schwartz, Kamis, and Drogheria & Alimentari, and Vahiné brands in Europe, the Middle East, and Africa; McCormick and DaQiao brands in China; and McCormick, Aeroplane, and Gourmet Garden brands in Australia, as well as markets regional and ethnic brands, such as Zatarain's, Stubb's, Thai Kitchen, and Simply Asia. It also supplies its products under the private labels. This segment serves retailers comprising grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce retailers directly and indirectly through distributors and wholesale foodservice suppliers. The Flavor Solutions segment offers seasoning blends, spices and herbs, condiments, coating systems, and compound flavors to multinational food manufacturers and foodservice customers. It serves foodservice customers directly and indirectly through distributors. The company was founded in 1889 and is headquartered in Hunt Valley, Maryland.

How the Company Makes Money

McCormick & Company generates revenue through the sale of its products across two primary segments: consumer and flavor solutions. The consumer segment targets retail customers, offering a wide variety of branded spices, herbs, and flavorings available through grocery stores, mass merchandisers, warehouse clubs, and e-commerce platforms. The flavor solutions segment serves food manufacturers and the foodservice industry, providing custom flavor systems, branded food products, and integrated solutions to enhance culinary offerings. Key revenue streams include direct sales to consumers, partnerships with major food companies, and contracts with restaurants and foodservice providers. McCormick's strategic acquisitions and global presence further bolster its revenue, allowing the company to capture diverse market opportunities and adapt to changing consumer preferences.

McCormick & Company Financial Statement Overview

Summary

McCormick & Company shows strong profitability with a high gross profit margin of 38.6% and net profit margin of 11.7% for TTM. The balance sheet is moderately leveraged with a debt-to-equity ratio of 0.65, and cash flow generation is robust with a free cash flow to net income ratio of 0.87. However, rising debt levels and inconsistent free cash flow growth present potential risks.

Income Statement

McCormick & Company demonstrates strong profitability with impressive gross and net profit margins. The gross profit margin remains consistently high at around 38.6% for TTM, reflecting effective cost management. The net profit margin stands at 11.7% for TTM, showcasing solid bottom-line performance. Revenue growth has been steady with a 5.9% increase from 2022 to 2023, indicating resilient market demand. EBIT and EBITDA margins also indicate robust operational efficiency at 15.7% and 18.6% respectively for TTM.

Balance Sheet

The company's balance sheet reflects moderate leverage with a debt-to-equity ratio of 0.65, suggesting a balanced use of debt and equity financing. Return on equity is healthy at 14.5% for TTM, indicating effective use of shareholder funds. The equity ratio is at 42.1%, which provides a stable financial structure. However, total debt levels have been increasing, which could pose a risk if not managed carefully.

Cash Flow

Cash flow analysis shows a robust free cash flow to net income ratio of 0.87 for TTM, indicating strong cash generation relative to net income. The operating cash flow to net income ratio is 1.15, reflecting efficient cash operations. However, free cash flow growth has been inconsistent, with a decline observed in the most recent period compared to the prior year, which could impact future liquidity if not addressed.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
6.73B	6.72B	6.66B	6.35B	6.32B	5.60B
	Gross Profit
2.60B	2.59B	2.50B	2.27B	2.49B	2.30B
	EBIT
1.05B	1.06B	963.00M	863.60M	1.02B	999.50M
	EBITDA
1.31B	1.32B	1.21B	1.19B	1.23B	1.19B
	Net Income Common Stockholders
784.80M	788.50M	680.60M	682.00M	755.30M	747.40M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
21.90M	186.10M	166.60M	334.00M	351.70M	423.60M
	Total Assets
3.25B	13.07B	12.86B	13.12B	12.91B	12.09B
	Total Debt
1.02B	4.51B	4.59B	5.33B	5.39B	5.01B
	Net Debt
994.80M	4.32B	4.42B	4.99B	5.04B	4.58B
	Total Liabilities
1.91B	7.75B	7.78B	8.43B	8.48B	8.15B
	Stockholders Equity
1.32B	5.29B	5.06B	4.68B	4.41B	3.93B
Cash Flow		Free Cash Flow
649.00M	921.90M	973.40M	389.50M	550.30M	816.00M
	Operating Cash Flow
899.00M	921.90M	1.24B	651.50M	828.30M	1.04B
	Investing Cash Flow
-244.30M	-269.00M	-260.50M	-146.40M	-908.60M	-1.03B
	Financing Cash Flow
-670.60M	-583.10M	-1.18B	-487.20M	22.00M	220.90M

McCormick & Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 75.90
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MKC, the sentiment is Negative. The current price of 75.9 is below the 20-day moving average (MA) of 79.40, below the 50-day MA of 79.28, and below the 200-day MA of 77.13, indicating a bearish trend. The MACD of 0.46 indicates Positive momentum. The RSI at 56.86 is Neutral, neither overbought nor oversold. The STOCH value of 87.71 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MKC.

McCormick & Company Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MKC	74 Outperform	$20.36B	26.06	14.73%	2.37%	0.40%	10.89%
HRL	71 Outperform	$16.52B	21.81	9.54%	3.88%	-1.84%	-5.14%
CAG	70 Outperform	$12.26B	37.59	3.67%	5.60%	-3.15%	-65.38%
GIS	66 Neutral	$31.79B	12.75	27.37%	4.21%	-2.62%	4.27%
CPB	66 Neutral	$11.36B	21.94	13.43%	4.07%	9.15%	-31.94%
Sector *	62 Neutral	$20.34B	13.97	-16.14%	3.32%	1.30%	5.01%
SJM	61 Neutral	$12.25B	22.22	-3.55%	3.90%	7.07%	-181.54%

McCormick & Company Corporate Events

Patricia Little to Retire from McCormick’s Board

On January 27, 2025, Patricia Little informed McCormick & Company’s Board of Directors of her intention to retire and not stand for re-election at the next annual stockholders’ meeting scheduled for March 26, 2025. Her departure marks a transition within the company’s governance structure, potentially impacting its strategic direction and stakeholder interests as they prepare for the upcoming meeting.