McCormick & Company Inc. (MKC) – Mix of expansion, branding and high cost makes it a “hold”

McCormick & Company Inc. (MKC) (Q2FY23)

Introduction

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 LA Drogheria, 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 food service 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.

Highlights

MKC’s expansion into the growing Mexican food market with Cholula Taco recipe mixes and salsas has been successful, especially after its Cinco de Mayo execution. The company is increasing its Cholula brand marketing investments to support the expanded portfolio in Q3FY23 which is expected to drive sales for the company.

Stock performance

McCormick stock gave returns of -7.2% and -0.1% in the period of three months and one year. The stock has a 52-week high of $94.39 and a 52-week low of $70.60. The stock gave returns of -20.4% and CAGR of -7.3% over a period of three years. The stock had a 200-Day Moving Average of $83.45 and a 50-Day Moving Average of $86.86.

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Highlights

Valuation

– Enterprise Value
– CrispIdea Forecast
– CrispIdea Segment Forecast
– Economic Value Added Analysis
– P/E Analysis
– Peer Valuation
– CrispIdea Forecast Relative to Consensus
– Consensus History and Surprise
– Consensus Momentum

Actual & Historical Performance

– Income Statement
– Balance Sheet
– Cash Flow
– 10 Year Historical Performance
– Ratio Analysis
– Du Pont Analysis
– ROIC & ROCE Analysis
– Segment Performance
– M&A Deals

Peer Performance

– Summary
– Profitability
– Growth
– Price Performance

Ownership

Stock Price Performance

Crispidea Coverage

No of Pages: 33

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