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McCormick & Co Inc Registered Shs Non Vtg MKC

Morningstar Rating
$68.16 +0.43 (0.63%)
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Company Report

Brand Investment Heats Up at McCormick in a Bid to Counter a Weak Consumer Spending Backdrop

As the leading player in the $19 billion global spices and herbs market—with nearly 20% share, 4 times the next-largest operator, according to Euromonitor—McCormick is a valuable partner for retailers. However, competitive and macro headwinds abound. For one, McCormick continues to face cost pressure (related select commodities, transportation, and labor) that have ensnarled firms of all stripes. Further, we think consumers (particularly those with lower incomes and/or on a fixed budget) are beginning to tighten spending, given stepped up prices at the grocery store as well as rising interest rates, which could serve to constrain its results if consumers trade down or out of the category.

Price vs Fair Value

MKC is trading at a 6% premium.
Price
$67.73
Fair Value
$29.00
Uncertainty
Medium
1-Star Price
$89.70
5-Star Price
$34.60
Economic Moat
Gztj
Capital Allocation
Hgrdxcpw

Bulls Say, Bears Say

Bulls

We see the merits of its technology modernization effort (buoying future sales growth), as it is replacing a system that has been in place since the early 2000s when the firm was half the size it is now.

Bears

Cost pressures have yet to subside (particularly labor and transportation) and could reignite if supply chain disruptions linger, capping near-term profits.

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News

Trading Information

Previous Close Price
$67.73
Day Range
$68.1668.57
52-Week Range
$59.1494.39
Bid/Ask
$68.12 / $68.19
Market Cap
$18.34 Bil
Volume/Avg
36,553 / 1.7 Mil

Key Statistics

Price/Earnings (Normalized)
25.18
Price/Sales
2.74
Dividend Yield (Trailing)
2.35%
Dividend Yield (Forward)
2.48%
Total Yield
2.54%

Company Profile

In its more-than 130-year history, McCormick has grown to become the leading global manufacturer, marketer, and distributor of spices, herbs, extracts, seasonings, and other flavorings. Beyond end consumers, McCormick's customer base also includes top quick-service restaurants, retail grocery chains, and other packaged food and beverage manufacturers. And its reach is global, with nearly 40% of sales generated beyond its home turf to include 150 other countries and territories. In addition to its namesake brand, the firm's portfolio includes Old Bay, Zatarain's, Thai Kitchen, Frank's RedHot, French's, and Cholula, among others.
Sector
Consumer Defensive
Industry
Packaged Foods
Stock Style Box
Mid Core
Total Number of Employees
13,800

Competitors

Valuation

Metric
MKC
CAG
KHC
Price/Earnings (Normalized)
25.1810.2311.97
Price/Book Value
3.591.490.87
Price/Sales
2.741.111.65
Price/Cash Flow
18.887.199.18
Price/Earnings
MKC
CAG
KHC

Financial Strength

Metric
MKC
CAG
KHC
Quick Ratio
0.240.270.44
Current Ratio
0.650.910.99
Interest Coverage
4.663.434.94
Quick Ratio
MKC
CAG
KHC

Profitability

Metric
MKC
CAG
KHC
Return on Assets (Normalized)
5.59%5.93%4.06%
Return on Equity (Normalized)
14.78%14.97%7.46%
Return on Invested Capital (Normalized)
8.71%9.01%6.27%
Return on Assets
MKC
CAG
KHC
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