McCormick & Company (MKC) AI Stock Analysis

• Market Cap: $19.07B
• Dividend Yield: 2.45%
• Average Volume (3M): 2.14M
• Price to Earnings (P/E): 24.4
• Beta (1Y): 0.19
• Revenue Growth: 0.40%
• EPS Growth: 10.89%
• Country: US
• Employees: 14,100
• Sector: Consumer Defensive
• Sector Strength: 75
• Industry: Packaged Foods
• EPS (TTM): 0.60
• Shares Outstanding: 252,681,730
• 10 Day Avg. Volume: 2,600,484
• 30 Day Avg. Volume: 2,144,572
• PEG Ratio: -38.20
• Price to Book (P/B): 3.76
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 31.42
• 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: $88.13
• Price Target Upside: 23.93% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 9

• Rating: 67 Neutral
• Price Target: $81.00 ▲( 13.91% Upside)

McCormick & Company's overall stock score reflects strong financial performance and solid strategic initiatives supporting future growth. However, technical indicators point to potential bearish trends, and valuation metrics suggest the stock may be overvalued. Earnings call insights highlight both strengths in sales growth and challenges in customer volumes and currency impacts. The company's confidence in its growth strategies provides a positive outlook despite these challenges.

Positive Factors

Consumer Demand

Scanner data in the Americas Consumer business remains strong, supporting the Buy thesis and top pick status for MKC.

Cost Management

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.

Market Trends

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

Negative Factors

Financial Performance

MKC shares have underperformed since 1Q earnings, with the stock down 7% compared to the S5PACK Index.

Sourcing Challenges

A shift to domestic sourcing of key spices and ingredients could prove difficult for MKC.

Tariff Impact

Potential tariff impact could be a $75 million hit to operating profit due to global sourcing of ingredients.

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 diverse range of flavor solutions, which include consumer products and industrial flavor solutions. The consumer segment, which targets home cooks and retail customers, offers branded spices, herbs, and seasonings, contributing a significant portion of the company's revenue. The industrial segment provides flavor solutions to food manufacturers and foodservice operators, creating customized flavors, branded foods, and other culinary products tailored to the specific needs of commercial clients. McCormick's revenue streams are bolstered by strategic acquisitions of complementary brands and partnerships with retailers and foodservice providers, which expand its market reach and product offerings.

McCormick & Company Financial Statement Overview

Summary

McCormick & Company presents a solid financial standing with strong profitability and operational efficiency. The company maintains a stable balance sheet with a good equity base, though rising debt levels warrant careful monitoring. Cash flow generation is strong, supporting the company's ability to fund operations and growth. The financial health is supported by consistent revenue growth and effective cost management, positioning the company well for future challenges in the packaged foods industry.

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
1.32B	1.30B	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
102.80M	186.10M	166.60M	334.00M	351.70M	423.60M
	Total Assets
12.90B	13.07B	12.86B	13.12B	12.91B	12.09B
	Total Debt
3.55B	4.51B	4.59B	5.33B	5.39B	5.01B
	Net Debt
3.45B	4.32B	4.42B	4.99B	5.04B	4.58B
	Total Liabilities
7.45B	7.75B	7.78B	8.43B	8.48B	8.15B
	Stockholders Equity
5.42B	5.29B	5.06B	4.68B	4.41B	3.93B
Cash Flow		Free Cash Flow
649.00M	647.00M	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: 71.11
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 71.11 is below the 20-day moving average (MA) of 74.72, below the 50-day MA of 76.64, and below the 200-day MA of 77.65, indicating a bearish trend. The MACD of -1.14 indicates Positive momentum. The RSI at 34.79 is Neutral, neither overbought nor oversold. The STOCH value of 9.01 is Positive, 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
GIS	70 Outperform	$29.23B	11.72	27.37%	4.50%	-2.62%	4.27%
CAG	68 Neutral	$10.69B	32.78	3.67%	6.25%	-3.15%	-65.38%
MKC	67 Neutral	$19.07B	24.41	14.73%	2.45%	0.40%	10.89%
HRL	66 Neutral	$16.19B	21.37	9.54%	3.89%	-1.84%	-5.14%
CPB	66 Neutral	$9.99B	19.30	13.43%	4.54%	9.15%	-31.94%
Sector *	64 Neutral	$8.82B	14.56	4.78%	173.92%	3.50%	2.20%
SJM	58 Neutral	$11.99B	22.22	-3.55%	3.82%	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.