McCormick’s sales rose 5.6%, as higher selling prices which offset lower volumes.
Meanwhile, the stock trades at 26.0 times the company’s 2023 earnings forecast.
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MCCORMICK & CO. INC. (New York symbol MKC; www.mccormick.com) makes spices, seasonings and flavours.
In its fiscal 2023 third quarter, ended August 31, 2023, McCormick’s sales rose 5.6%, to $1.68 billion from $1.60 billion a year earlier. That matched the consensus forecast.
The higher sales are mainly because the company raised its selling prices (up 6%), which offset lower volumes (down 2%) as well as the sale of certain businesses.
If you exclude unusual items, earnings per share fell 5.8%, to $0.65 from $0.69. That’s due higher employee and marketing costs. The latest earnings also matched the consensus estimate.
Growth Stocks: McCormick’s valuation seems excessive for relatively modest expansion potential
McCormick raised your quarterly dividend by 5.4%. Starting with the January 2023 payment, investors began to receive $0.39 a share instead of $0.37. The new annual rate of $1.56 yields 2.2%.
However, while restaurants have largely re-opened their dining areas, it’s likely customer traffic will remain depressed for the next few months. McCormick’s exposure to China (the Asia/Pacific region supplies about 11% of its sales) is another risk factor due to that country’s weak post-pandemic growth.
McCormick now expects to earn between $2.62 and $2.67 a share for all of fiscal 2023, up from its previous range of $2.60 to $2.65 share. The stock currently trades at a somewhat high 26.0 times the midpoint of that new range.
Recommendation in Wall Street Stock Forecaster: McCormick & Co. is a hold.