- Boosted EPS Forecast: McCormick increased its full-year adjusted EPS forecast to $2.85-$2.90 from $2.76-$2.81, with estimates at $2.86.
- Operating Income Growth: The company projects operating income to grow by 9% to 11%.
- Q3 Achievements:
- Adjusted operating profit rose by 14.9%.
- Adjusted EPS increased to 83c from 65c year over year, beating the 67c estimate.
- Net sales came in at $1.68 billion, a slight decrease of 0.3% year over year but ahead of the $1.67 billion estimate.
- Flavor Solutions net sales were $742.4 million, down 0.7% year over year but above the $735.3 million estimate.
- Gross profit margin improved to 38.7% from 37% year over year, surpassing the 37.9% estimate.
- Cash and cash equivalents reached $200.8 million, a 30% increase year over year and above the $194.1 million estimate.
- Consumer net sales were $937.4 million, approximately flat year over year and above the $928 million estimate.
- 2024 Outlook:
- Sales growth expected to range between -1% to 1% compared to 2023, with minimal currency impact.
- Reaffirmed sales and operating profit growth outlook for fiscal year 2024, with minimal currency impact.
- Special charges expected to reduce EPS by $0.04 in 2024.
- Excluding special charges, adjusted operating income is expected to increase 4% to 6%, driven by gross margin expansion, partially offset by higher brand marketing investments.
- CEO Comments:
- Brendan M. Foley highlighted satisfaction with year-to-date performance, aligning with expectations and reflecting targeted investments.
- A milestone was reached with global positive volume growth across both segments, expected to continue into Q4.
- Despite challenges in China, the Consumer segment saw solid volume growth.
- Analyst Ratings: 5 buys, 9 holds, 3 sells.
McCormick & Company on Smartkarma
According to analyst coverage on Smartkarma by Baptista Research, McCormick & Company, Inc. has recently reported slightly subdued performance in its latest quarterly results. Despite facing challenges, the company has demonstrated strong strategies to adapt to the evolving consumer landscape, driven by a robust innovation pipeline and targeted investments. The Consumer segment of McCormick has shown resilience, with volume growth across major markets indicating sustained consumer interest in flavor and seasonings, a core category for the company.
Baptista Research also notes that McCormick’s investments to enhance volume trends and drive profitable growth have been successful, as evidenced by a 2% sales growth in constant currency in the first quarter. This growth was supported by a 3% contribution from pricing, although offset slightly by a 1% decline in volume and product mix due to the pruning of low-margin business and a canning business divestiture. The analysts are optimistic about the company’s performance and the potential longevity of positive volume growth in its Flavor Solutions segment.
A look at McCormick & Company Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 3 | |
| Dividend | 3 | |
| Growth | 3 | |
| Resilience | 2 | |
| Momentum | 5 | |
| OVERALL SMART SCORE | 3.2 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
McCormick & Company, Inc. is positioned for a promising long-term outlook according to Smartkarma’s Smart Scores analysis. With a strong momentum score of 5, the company shows significant positive momentum in various aspects, indicating potential growth and market confidence. Both the value and dividend scores stand at a respectable 3, highlighting stability and attractiveness for investors seeking returns and solid financials. While growth is also rated at 3, indicating moderate growth prospects, the company’s resilience score of 2 suggests a need for caution in volatile market conditions.
McCormick & Company, Inc. operates in the flavor products sector, providing spices, herbs, and seasonings to a wide range of customers in the food industry. Its distribution network includes retail stores, food manufacturers, and food service businesses. The company’s Smart Scores underscore a balanced outlook, combining steady value and dividend metrics with strong momentum, pointing towards a potentially bright future for the company in the long run.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
Have feedback on this article? Concerned about the content? Get in touch with us directly.
💡 Before it’s here, it’s on Smartkarma
Sign Up for Free
The Smartkarma Preview Pass is your entry to the Independent Investment Research Network
- ✓ Unlimited Research Summaries
- ✓ Personalised Alerts
- ✓ Custom Watchlists
- ✓ Company Analytics and News
- ✓ Events & Webinars
