- Adjusted EPS Forecast: McCormick has revised its full-year adjusted EPS forecast to $2.76-$2.81 from the previous $2.80-$2.85, below the estimate of $2.86.
- Operating Income Growth: The company expects operating income to increase by 8% to 10%.
- Second Quarter Highlights:
- Adjusted operating profit rose by 0.3%.
- Adjusted EPS was 69 cents, up from 60 cents year-over-year (y/y), beating the estimate of 59 cents.
- Net sales were $1.64 billion, a 1% decrease y/y, but slightly above the estimate of $1.63 billion.
- Flavor Solutions Segment:
- Net sales were $738.7 million, down 1.1% y/y, but above the $728.1 million estimate.
- Gross Profit Margin: Increased to 37.7% from 37.1% y/y, surpassing the estimate of 37.3%.
- Cash Position: Cash and cash equivalents totaled $166.3 million, a 31% increase y/y, though slightly below the estimate of $169.4 million.
- Consumer Segment: Net sales were $904.5 million, down 0.8% y/y, but higher than the $900.3 million estimate.
- 2024 Sales Outlook: Sales are expected to vary between -2% to 0% compared to 2023, or -1% to 1% on a constant currency basis.
- Special Charges Impact: Special charges are anticipated to reduce earnings per share by $0.04 in 2024.
- Future Operating Income: Excluding special charges, adjusted operating income for 2024 is projected to increase by 3% to 5% (or 4% to 6% on a constant currency basis).
- CEO’s Comments: Brendan M. Foley, President and CEO, stated:
- The first half performance was in line with expectations, driven by strategic business investments.
- The Consumer segment saw sequential volume improvements and volume growth, with expected continued momentum in the second half of the year.
- In the Flavor Solutions segment, lower demand from quick service restaurants and packaged food customers affected second quarter performance.
- Analyst Ratings: The company’s stock has 5 buy recommendations, 10 holds, and 2 sells.
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McCormick & Company on Smartkarma
Analysts on Smartkarma, such as Baptista Research, have provided detailed insights into McCormick & Company‘s recent performance. In a report titled “McCormick & Company: Will The Positive Volume Growth In Flavor Solutions Last Long Term? – Major Drivers,” Baptista Research highlighted the positive impact of McCormick’s investments in driving profitable growth, despite a 1% decline in volume and product mix in Q1. This decline was attributed to strategic business decisions, including divesting low-margin businesses.
Similarly, in another report titled “McCormick & Co: Can The Gradual Recovery in China & Exiting Low Margin Businesses Save The Day? – Major Drivers,” Baptista Research discussed the mixed results in McCormick’s Q4 2023 results. While sales saw a 3% increase, consumer behavior changes impacting volume trends were noted. The analysts raised questions about the effectiveness of the company’s strategies in light of evolving consumer preferences.
A look at McCormick & Company Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 3 | |
| Dividend | 3 | |
| Growth | 3 | |
| Resilience | 2 | |
| Momentum | 4 | |
| OVERALL SMART SCORE | 3.0 |
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
Analysts at Smartkarma have rated McCormick & Company with an overall positive outlook, with the company scoring highest in Momentum at 4. This indicates strong market performance and potential for continued growth in the future. While the company also received respectable scores of 3 in Value, Dividend, and Growth factors, its lower score of 2 in Resilience suggests some vulnerability to market fluctuations. Despite this, McCormick & Company is well-positioned to benefit from its strong momentum in the market.
McCormick & Company, Inc. is a well-established player in the flavor products industry, offering a wide range of spices, herbs, seasonings, and other specialty food products. With a presence in retail stores, food manufacturing, and food service sectors, the company has a diverse market reach. Their smart scores highlight a solid performance across key factors, making them an attractive prospect for investors looking for potential growth opportunities in the long term.
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.
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