Free Trial

McCormick & Company is Looking a Little Bland After Earnings

McCormick & Company is Looking a Little Bland After Earnings
McCormick & Company is Looking a Little Bland After Earnings

McCormick & Company (NYSE: MKC) confirmed what many consumers already knew. It can be difficult to keep your spice cabinet fully stocked. And it’s about to get more expensive. On the company’s conference call following the release of its earnings report on September 30, McCormick CEO Lawrence Kurzius said the company is experiencing “the highest inflationary period of the last decade, or even two.” 

For that reason, McCormick lowered its guidance for the rest of the year and, not surprisingly, the company’s stock is down nearly 2% in late-day trading. This is despite the fact that the company generated a double beat. Earnings per share (EPS) came in at 79 cents which was higher than the 72 cents EPS that analysts were expecting. On the revenue side, the beat was less impressive with the company generating $1.56 billion in revenue just a tick above the $1.54 billion expected.  

Supply Chain Woes 

In addition to dealing with cost pressures, the company cited supply chain difficulties. That’s currently playing out on supermarket shelves where it can be difficult to find your favorite spices or that particular spice you need for a recipe. I’ve found that to be the case on several occasions over the past nine months. Perhaps you have as well. 

McCormick reported higher sales, as expected in its commercial channel. This corresponds to the reopening of the economy. Retail sales showed just a 1% increase which reflects the slower growth that was expected as people began to dine out.  

Expect That Holiday Meal to Cost a Little More 

On the earnings call, the company announced it was expecting to pass its higher costs through its supply chain. That means you can expect to be paying more for spices as we enter the holiday season. And this is due in part to Kurzius’ belief that the trend towards cooking at home will stay in place.  

This may not seem to mean much, but a 10% increase in prices amounts to anywhere from 30 cents to 60 cents depending on the particular spice and size of jar. That may seem like a nominal amount but may not to consumers who are already seeing grocery bills climb well above their pre-pandemic levels.  

A Solid, Not Spectacular Dividend 

McCormick is a member of the Dividend Aristocrat club. In 2021, the company made it 36 consecutive years of increasing its dividend. The company’s annual dividend of $1.36 is on par with the overall sector as well as the broader market. However, it’s three-year growth lags behind both benchmarks.  

And with margin pressure likely to persist for some time, investors shouldn’t expect much growth in the dividend. Still, the company did continue its dividend during the pandemic and gave its shareholders a special dividend at the end of 2020. That shows that management are prioritizing shareholder value. MKC Stock Deserves a Look, But Maybe Not a Buy 

Currently, the consensus price target for MKC stock projects a 14% gain from the stock’s current level. However, the stock received two lowered price targets from analysts prior to the earnings report. More may be on the way.  

The period following an earnings report is a time when analysts sharpen their pencils. In many cases, that means adjusting their rating for a company. That’s particularly true when a company like McCormick downgrades its outlook.  

In this case it may be wise to not fight the trend. MKC stock is down 12% for the year and that was before it lowered its forecast. The stock is testing a level of support it hit in August. If that line of support holds, there could be a buying opportunity. The good news is that, then as now MKC has a relative strength indicator (RSI) that suggests an oversold condition may exist.  

If the same holds true, there could be a buying opportunity. But if it doesn’t you may be better off waiting for a clear buying signal.  

Should You Invest $1,000 in McCormick & Company, Incorporated Right Now?

Before you consider McCormick & Company, Incorporated, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and McCormick & Company, Incorporated wasn't on the list.

While McCormick & Company, Incorporated currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

7 Stocks to Ride The A.I. Megaboom Cover


We are about to experience the greatest A.I. boom in stock market history...

Thanks to a pivotal economic catalyst, specific tech stocks will skyrocket just like they did during the "dot com" boom in the 1990s.

That’s why, we’ve hand-selected 7 tiny tech disruptor stocks positioned to surge.

  1. The first pick is a tiny under-the-radar A.I. stock that's trading for just $3.00. This company already has 98 registered patents for cutting-edge voice and sound recognition technology... And has lined up major partnerships with some of the biggest names in the auto, tech, and music industry... plus many more.
  2. The second pick presents an affordable avenue to bolster EVs and AI development…. Analysts are calling this stock a “buy” right now and predict a high price target of $19.20, substantially more than its current $6 trading price.
  3. Our final and favorite pick is generating a brand-new kind of AI. It's believed this tech will be bigger than the current well-known leader in this industry… Analysts predict this innovative tech is gearing up to create a tidal wave of new wealth, fueling a $15.7 TRILLION market boom.

Right now, we’re staring down the barrel of a true once-in-a-lifetime moment. As an investment opportunity, this kind of breakthrough doesn't come along every day.

And the window to get in on the ground-floor — maximizing profit potential from this expected market surge — is closing quickly...

Simply enter your email below to get the names and tickers of the 7 small stocks with potential to make investors very, very happy.

Get This Free Report
Chris Markoch
About The Editor

Chris Markoch

Editor & Contributing Author

Contributing Author

Like this article? Share it with a colleague.

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
McCormick & Company, Incorporated (MKC)
4.5555 of 5 stars
$65.23-0.9%2.76%22.57Hold$78.22
Compare These Stocks  Add These Stocks to My Watchlist