14. McCormick & Company, Incorporated (NYSE:MKC)
Average Analyst Rating Score: 3.2
McCormick & Company, Incorporated (NYSE:MKC) is an American spice and extract manufacturing company that markets and distributes a wide range of related products. The company started 2024 with strong first-quarter earnings after struggling with volume trends in 2023. In the first quarter of 2024, it reported revenue of $1.6 billion, which showed a nearly 3% growth from the same period last year. The company’s operating cash flow for the period also grew to $138 million, from $103 million in the prior-year period. Though its revenue was up, the company continues to face challenges with volumes, which saw a slight decline of 1%. This drop in volumes mainly occurred due to the company’s strategic choices to discontinue low-margin businesses and sell a small canning business. In addition, its underlying volume and product mix remained flat compared to the first quarter of 2022.
McCormick & Company, Incorporated (NYSE:MKC) saw growth in its revenues mainly because of its pricing actions. However, analysts believe that increasing prices is just a short-term solution to navigate through challenges posed by lower sales volumes. For 2024, the company expects to boost its profit margins with its higher prices strategy. Moreover, it expects sales to range from a decrease of 2% to 0% compared to 2023 or a decrease of 1% to an increase of 1% on a constant currency basis. This growth outlook in a challenging environment could be seen as stable, but it may not be considered exceptional if market conditions are highly competitive. T
McCormick & Company, Incorporated (NYSE:MKC) has a forward P/E of 23.36 and its 5-year average P/E is 25.6. The stock achieved its high of $105 per share in mid-2022 but has not returned to that level since. Instead, it fell to as low as $60 per share in late 2023. Analysts have a consensus Hold rating on the stock, which places it on our list of the worst dividend aristocrats to buy now.
McCormick & Company, Incorporated (NYSE:MKC) currently offers a quarterly dividend of $0.42 per share for a dividend yield of 2.48%, as of June 14. The company has been growing its dividends consistently for the past 38 years.
Investment management company Ave Maria highlighted growth prospects for McCormick & Company, Incorporated (NYSE:MKC) in its Q1 2024 investor letter. Here is what the firm has to say:
“McCormick & Company, Incorporated (NYSE:MKC) manufactures and distributes spices and other flavor products to the food industry. This seemingly mundane business achieves extraordinary returns on capital as the spices and seasoning category tends toward a single dominant supplier which can simplify the complex inventory requirements of its customers. Over the coming years, McCormick should benefit from increasing demand for diverse cuisines, the trend towards cooking from scratch, and the younger consumers’ preference for heat via its Cholula hot sauce products.”
McCormick & Company, Incorporated (NYSE:MKC) was a part of 27 hedge fund portfolios at the end of Q1 2023, down from 38 in the preceding quarter, as per Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of more than $1.4 billion.
