McCormick & Company Has Shifted To More Profitable Products

McCormick’s strategic focus on digital transformation and investment in core categories positions it well for long-term growth.

However, the stock trades at 25.0 times the company’s forward earnings forecast. That’s a somewhat high multiple as cost-conscious consumers switch for now to cheaper, generic brands of spices.

MCCORMICK & CO. INC. (New York symbol MKC; www.mccormick.com) makes spices, seasonings and flavours.

McCormick continues to shift its focus to more profitable products. The company is also benefiting as a still-high cost of living prompts more consumers to eat at home instead of restaurants.

In its fiscal 2025 second quarter, ended May 31, 2025, McCormick’s sales rose 1.0%, to $1.66 billion from $1.64 billion a year earlier. If you exclude the contribution of acquisitions and the negative impact of currency rates, sales improved 1.6% on higher volumes (up 1.3%) and selling prices (up 0.3%). The latest sales figure also matched the consensus forecast.

Higher income taxes offset the benefits from an ongoing cost-cutting plan. As a result, earnings before unusual items in the quarter fell 0.4%, to $184.8 million from $185.6 million; earnings per share were unchanged at $0.69 a share. Even so, that beat the $0.66 consensus estimate.

Annual guidance reaffirmed despite challenges

The maker of spices, seasonings and flavours is working with restaurants and food makers to re-formulate its products as the U.S. government bans certain food dyes. These dyes are only a small number of the company’s products, so the cost of this change will probably be low. However, planned price hikes to offset tariffs could hurt sales as the company faces strong competition from cheaper store-brands.

Even so, McCormick still expects its sales (excluding currency rates) for all of fiscal 2025 will rise about 2%. The company also expects its earnings will improve roughly 6%, to between $3.03 and $3.08 a share. The stock currently trades at 25.0 times the midpoint of that range. That’s a somewhat high multiple as cost-conscious consumers switch to cheaper, generic brands of spices.

Meanwhile, McCormick raised your quarterly dividend by 7.1%. Starting with the January 13, 2025, payment, investors now receive $0.45 a share instead of $0.42. The new annual rate of $1.80 yields 2.4%. The company has now increased the annual dividend rate each year for the past 39 years.

Recommendation in Wall Street Stock Forecaster: McCormick & Co. Inc. is a hold.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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