Is McCormick a Steal Ahead of Game-Changing Unilever Deal?

Key Points

• McCormick's proposed $15.7 billion combination with Unilever's food business has driven shares down 50% from record highs, creating a potential value opportunity.
• Q2 results showed 16.7% revenue growth and adjusted EPS of 80 cents, beating estimates and supported by organic growth and the McCormick de Mexico acquisition.
• The company's 4% dividend yield is backed by nearly 40 consecutive years of annual increases, offering investors income as they await a merger catalyst.

McCormick & Company’s NYSE: MKC share price is a steal as of mid-2026, down 50% from record highs ahead of a potentially game-changing deal.

The proposed combination with Unilever’s food business could triple the business, generate shareholder value, and provide sufficient cash flow to enable balance sheet quality and capital returns.

Balance sheet safety is one of the reasons the share price is down so much. The transaction includes a $15.7 billion cash payment to Unilever, with McCormick relying on cash on hand and new debt to fund that portion of the deal. That added debt is a key reason investors are focused on the company’s post-close leverage.

The bad news is that McCormick’s leverage ratio will rise to a higher-than-wanted 4.0x EBITDA, but there is good news to offset the bad.

Already carrying investment-grade debt ratings from all major ratings agencies, McCormick’s executives have expressed a commitment to reducing the debt quickly. Plans are in place to drive it below the targeted 3x level within two years, which would provide a tailwind for shareholder value.

High-Quality McCormick & Company Presents Deep Value in 2026

As it stands, McCormick is in a healthy financial position and growing its business. In this environment, the roughly 8x current year earnings are a deep discount to historical norms.

Typically trading in the mid-20x range, valuation metrics suggest a robust valuation expansion is possible over time, compounding the impact of growth. The company is expected to sustain organic growth without the merger, potentially accelerating it in the wake. Estimates as of late-June suggest much lower valuations relative to long-term forecasts, setting the stage for several hundred basis points of stock price gains over the next three to five years.

Analyst trends play into MKC’s price decline as well as the long-term outlook.

While price targets have declined, the low end aligns with the late-June price action, suggesting a floor is in place.

Within that, the consensus Hold rating comes with a 46% Buy-side bias, which, given the 13 analysts covering the stock, provides some conviction in the outlook.

In this scenario, MKC could rebound at any time with the right catalyst and will likely move sideways until one emerges. Upcoming catalysts include milestones tied to the Unilever merger, such as the expected announcement of a European secondary listing location and regulatory approvals in the United States and United Kingdom.

Institutional trends highlight the value and underpin market support as June nears its end. The group owns nearly 80% of the stock and has accumulated shares at a semi-aggressive pace over the trailing 12 months, despite distributing in Q1 2026. The critical detail is that accumulation resumed in Q2 at an aggressive $10-to-$1 pace and will likely remain supportive of price action, given the company’s core strengths and a value-building merger opportunity.

McCormick Outperformance: Organic and Acquisitions Shine Through

McCormick & Company had a solid Q2 with growth underpinned by organic strength and the acquisition of McCormick de Mexico. Revenue grew by 16.7%, with 1.7% organic sales growth, driven by a 2.2% increase in average prices. Both segments reported strength, led by a 2.9% organic increase in flavor solutions, with both segments amped by acquisition-related growth.

Margin news is also good. The acquisition is driving significant back-end consolidations and cost savings, leading to improved gross and operating margins. Adjusted gross margin improved by 270 bps, adjusted operating by 180 bps, leaving adjusted earnings per share (EPS) at 80 cents, up 11 cents year-over-year (YOY) and 11 cents or 1600 bps better than expected.

Catalysts and a Risk-Reducing, High-Yielding Dividend

Guidance is a catalyst for share prices because the company merely reaffirmed it, despite the FQ2 strengths. The market assumes the guidance is cautious and expects the Q2 strength to be sustained in the upcoming release.

McCormick’s dividend is a risk-reducing factor for investors. The ultra-low share price results in an ultra-high yield, approximately 4% with shares around $50, and it is a reliable payment.

The company is a Dividend Achiever with nearly 40 years of consecutive annual distribution increases, and is on track to hit the 50-year mark and be crowned a Dividend King.

McCormick’s position as a consumer staples company gives it some defensive qualities, but the stock still faces risks tied to pricing, volume, consumer trade-down behavior, and merger execution. Consumer headwinds have shoppers trading down on center-of-plate costs in favor of flavors. Cheap cuts and starches work well with bold, zesty, and spicy flavors, and McCormick is a leading source. Execution risk is the bigger headwind, as delays could be reflected in the stock's price. The worst-case scenario is that the merger is completed, but synergies fail to yield the desired results.