McCormick & Company (MKC) AI Stock Analysis

• Market Cap: $18.71B
• Dividend Yield: 2.59%
• Average Volume (3M): 2.11M
• Price to Earnings (P/E): 24.2
• Beta (1Y): 0.23
• Revenue Growth: 0.89%
• EPS Growth: 4.85%
• Country: US
• Employees: 14,100
• Sector: Consumer Defensive
• Sector Strength: 60
• Industry: Packaged Foods
• EPS (TTM): 0.69
• Shares Outstanding: 253,041,200
• 10 Day Avg. Volume: 2,002,071
• 30 Day Avg. Volume: 2,109,097
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.28
• Enterprise Value/Revenue: 3.55
• Enterprise Value/Gross Profit: 9.22
• Enterprise Value/Ebitda: 18.04
• 1Y Price Target: $83.25
• Price Target Upside: 21.69% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 10

• Rating: 66 Neutral
• Price Target: $74.00 ▲(8.17% Upside)

McCormick & Company's overall stock score is driven by its strong financial performance and stable profitability, despite technical indicators suggesting bearish momentum. The valuation indicates potential overvaluation, but the dividend yield adds some attractiveness. The earnings call highlights both growth opportunities and challenges, contributing to a balanced outlook.

Positive Factors

Earnings

The company reported adjusted EPS of $0.69, which was above both BofA's and Visible Alpha's consensus estimates.

Financial Performance

Consumer organic sales growth outperformed, and Flavor Solutions profit grew impressively, demonstrating the company's ability to increase margins.

Strategic Management

The company's ability to manage a global supply chain and mitigate the impact of tariffs is seen as a strength by investors.

Negative Factors

Market Concerns

McCormick's stock is down 10% since the start of April, indicating market concerns about the company's prospects.

Outlook Risks

Tariffs could weigh on McCormick's forward outlook, posing a risk to the company's fiscal year 2025 estimates.

Tariff Impact

The tariff impact on McCormick's ingredient costs is larger than expected, with the current rate representing a 19% tariff compared to the previously estimated 13%.

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 generates revenue primarily through the sale of its spices, seasonings, and flavor products across its Consumer and Flavor Solutions segments. The Consumer segment earns revenue from retail sales of branded products to grocery chains and supermarkets, while the Flavor Solutions segment derives income from supplying custom flavors and seasonings to food manufacturers and food service industries. Key revenue streams include product sales, particularly in high-demand categories such as organic and gourmet spices, as well as strategic partnerships with major food companies that enhance distribution and market penetration. Additionally, McCormick benefits from ongoing trends toward home cooking and increased interest in diverse flavors, which drive consumer demand for its extensive product lines.

McCormick & Company Financial Statement Overview

Summary

McCormick & Company exhibits a strong financial position with consistent revenue growth and profitability. The income statement reflects solid margins and operational efficiency, while the balance sheet indicates moderate leverage with a strong equity base. Cash flow management is adequate, despite a decline in free cash flow growth.

Income Statement

McCormick & Company shows solid performance in its income statement with a stable gross profit margin of approximately 38.5% TTM and a consistent net profit margin around 11.5% TTM. Revenue growth is moderate, with a 1.3% increase in TTM compared to the previous period. EBIT and EBITDA margins are healthy at 15.8% and 19.7% respectively, indicating operational efficiency. The company is maintaining a strong profitability profile, although the net income has slightly decreased compared to the previous annual report.

Balance Sheet

The balance sheet of McCormick & Company reflects a moderate risk profile with a debt-to-equity ratio of 0.80, indicating moderate leverage. The equity ratio stands at 42.5%, showcasing a solid equity foundation. However, the return on equity is relatively stable at 13.8% TTM, which suggests effective utilization of equity. While debt levels are manageable, further reduction could enhance financial stability.

Cash Flow

The cash flow statement indicates a mixed picture. The operating cash flow to net income ratio is robust at 1.01, demonstrating good cash generation from operations. However, free cash flow growth has declined by 14.7% in TTM, posing a potential concern for future investments. The free cash flow to net income ratio is sound at 0.71, suggesting reasonable cash conversion. Overall, cash flow management remains adequate, though improvements could bolster financial flexibility.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.72B	6.66B	6.35B	6.32B	5.60B
Gross Profit	2.59B	2.50B	2.27B	2.49B	2.30B
EBITDA	1.30B	1.21B	1.16B	1.22B	1.18B
Net Income	788.50M	680.60M	682.00M	755.30M	747.40M
Balance Sheet
Total Assets	13.07B	12.86B	13.12B	12.91B	12.09B
Cash, Cash Equivalents and Short-Term Investments	186.10M	166.60M	334.00M	351.70M	423.60M
Total Debt	4.51B	4.59B	5.33B	5.39B	5.01B
Total Liabilities	7.75B	7.78B	8.43B	8.48B	8.15B
Stockholders Equity	5.29B	5.06B	4.68B	4.41B	3.93B
Cash Flow
Free Cash Flow	647.00M	973.40M	389.50M	550.30M	816.00M
Operating Cash Flow	921.90M	1.24B	651.50M	828.30M	1.04B
Investing Cash Flow	-269.00M	-260.50M	-146.40M	-908.60M	-1.03B
Financing Cash Flow	-583.10M	-1.18B	-487.20M	22.00M	220.90M

McCormick & Company Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 68.41
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 68.41 is below the 20-day moving average (MA) of 70.61, below the 50-day MA of 72.40, and below the 200-day MA of 75.30, indicating a bearish trend. The MACD of -0.84 indicates Positive momentum. The RSI at 36.57 is Neutral, neither overbought nor oversold. The STOCH value of 44.04 is Neutral, 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
CAG	72 Outperform	$9.15B	7.98	13.27%	7.38%	-3.64%	231.77%
Sector *	68 Neutral	¥219.32B	21.61	8.23%	2.16%	4.96%	1.22%
MKC	66 Neutral	$18.71B	24.20	14.19%	2.59%	0.89%	4.85%
CPB	66 Neutral	$9.69B	21.48	11.67%	4.76%	8.65%	-38.57%
GIS	66 Neutral	$26.93B	12.12	24.57%	4.88%	-1.87%	-5.16%
HRL	66 Neutral	$15.66B	20.95	9.39%	4.08%	-1.01%	-2.93%
SJM	60 Neutral	$11.82B	22.22	-17.87%	3.89%	6.69%	-261.87%

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.