McCormick vulnerable to next wave

Article Excerpt

MCCORMICK & CO. INC. $172 remains a hold. The stock (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 123.6 million; Market cap: $21.3 billion; Price-to-sales ratio: 4.3; Dividend yield: 1.4%; TSINetwork Rating: Average; www.mccormick.com) fell to $112 in March 2020 during the initial COVID-19 lockdowns. However, the stock quickly rebounded as the pandemic forced more consumers to eat at home. The sharp rise in meals at home spurred strong demand for McCormick’s spices, seasonings and flavours. However, the company gets about 40% of its sales from restaurants and foodservice customers such as school cafeterias. While many restaurants have started to re-open 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 12% of its sales) is another risk factor, particularly as that country experiences another wave of COVID-19 outbreaks. McCormick is a hold. hold…

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