Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Is McCormick & Company, Incorporated (MKC) Too Hot to Handle?

On Thursday, McCormick & Company, Incorporated (NYSE:MKC) will release its latest quarterly results. With a solid history of delivering regular dividend growth, McCormick & Company, Incorporated (NYSE:MKC) shares got very popular during the bull market, but the rise in interest rates have caused some to question whether the stock has gotten ahead of its fundamentals.

McCormick & Company, Incorporated (NYSE:MKC)

McCormick & Company, Incorporated (NYSE:MKC) is the premier maker of spices for the U.S. market, offering both its premium lines of name-brand spices as well as store-brand alternatives for cost-conscious grocery chains. Despite its impressive growth, valuations have risen to levels that suggest the potential for a pullback. Let’s take an early look at what’s been happening with McCormick over the past quarter and what we’re likely to see in its quarterly report.

Stats on McCormick

Analyst EPS Estimate $0.61
Change From Year-Ago EPS 1.7%
Revenue Estimate $1.01 billion
Change From Year-Ago Revenue 2.3%
Earnings Beats in Past 4 Quarters 2

Source: Yahoo! Finance.

Will McCormick’s earnings spice things up this quarter?
Analysts have trimmed their views on McCormick & Company, Incorporated (NYSE:MKC)’s earnings in recent months, with a $0.04 per share drop for May-quarter estimates and a penny-per-share decline for the full 2013 fiscal year. The stock has held up fairly well, remaining roughly flat since late March despite having fallen back from higher levels in recent weeks.

McCormick has certainly been hitting it out of the park lately, with the stock rising to all-time highs in early April after the company announced positive earnings in its previous quarterly report. Between its solid balance sheet and its all-pervasive business model, McCormick has a stranglehold on its industry in a way that Fool analyst Jason Moser believes makes it a must-own for a long-term investor like Warren Buffett. Although the commercial side of the business, which supplies spices to companies like food giant General Mills, Inc. (NYSE:GIS) and restaurant chain Yum! Brands, Inc. (NYSE:YUM), had relatively flat performance, the consumer side had strong growth.

One big growth area for McCormick is in emerging markets. With many of those markets having greater demand for spicy foods, McCormick has even greater potential to take advantage of the consumer opportunity overseas than it has already accomplished in the U.S. and in its other more mature markets.

To help it with those growth efforts, McCormick & Company, Incorporated (NYSE:MKC) announced late last month that it had completed its acquisition of China’s Wuhan Asia-Pacific Condiments. McCormick paid $147 million for the company, which has a strong presence in Central China and should help McCormick with its expansion plans in the emerging-market giant.

The biggest concern for investors in McCormick is the stock’s fairly rich multiple, which currently exceeds 20 times forward earnings for next year. Yet even though the company’s growth doesn’t appear to justify that price, its consistency has investors willing to pay a premium for reliable results that have stood the test of time.

In McCormick & Company, Incorporated (NYSE:MKC)’s quarterly report, look closely at how the mix of the company’s business segments perform this time around. Strength in its commercial business could point to better times not just for McCormick but also for General Mills, Inc. (NYSE:GIS), Yum! Brands, Inc. (NYSE:YUM), and the spice company’s other corporate customers.

The article Is McCormick Too Hot to Handle? originally appeared on and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter: @DanCaplinger. The Motley Fool recommends McCormick.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!