Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

McCormick's (MKC) Buyouts & Savings To Boost Q4 Earnings

Published 01/16/2019, 09:19 PM
Updated 07/09/2023, 06:31 AM

McCormick & Company, Incorporated (NYSE:MKC) is slated to release fourth-quarter fiscal 2018 results on Jan 24, before market opens. This Midland-based company’s earnings have surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average being 5.2%. In the preceding quarter, the bottom line was in line with the consensus mark. Further, the company has been witnessing year-over-year growth in the top and the bottom line for more than a year. That said, lets take a look at what’s in store for the company this time around.

Efforts to Boost Sales

This global leader in flavors and spices is strategically expanding portfolio through acquisitions. In fact, the acquisition of the food division of RB Foods has added iconic brands such as Frank's RedHot Hot Sauce and French's Mustard to McCormick’s portfolio, which have boosted sales. Gains from the RB buyout is expected to bolster performance in the impending quarter as well.

In the past, the company made significant acquisitions, including Italy-based Enrico Giotti SpA and Australia-based Botanical Food Company. These takeovers have augmented McCormick’s portfolio strength. Further, the company focuses on innovation to stay competitive as well as tap the evolving demand for new flavors, spices and herbs. We note that newly-added products boosted sales in the consumer and flavor solutions segments during the third quarter of fiscal 2018. Going ahead, the company is on track with product launches under the Frank’s banner. Health and wellness also continue to drive the innovation agenda.

McCormick & Company, Incorporated Price, Consensus and EPS Surprise

Can Savings Plans Offset Cost Woes?

Apart from endeavors to strengthen the top line, McCormick also pays attention to boost profitability through cost saving. In this respect, the Comprehensive Continuous Improvement (CCI) program is noteworthy. The company utilizes savings from this program for making growth-oriented investments. We note that savings through CCI and streamlining actions reached $117 million in fiscal 2017. Notably, cost savings from CCI expanded the company’s gross and adjusted operating income margins during the third quarter of fiscal 2018. This also marked the company’s 11th consecutive quarter of adjusted operating margin expansion.

Going ahead, McCormick expects to continue gaining from savings efforts, which is likely to fuel profits in the upcoming quarterly release. Such efforts are also expected to counter the negative impacts from higher freight and marketing expenses. Apart from McCormick, other food companies like United Natural Foods (NYSE:UNFI) , J. M. Smucker (NYSE:SJM) and TreeHouse Foods (NYSE:THS) have been grappling with rising freight expenses.

Estimates Unveil a Bright Picture

Backed by the aforementioned upsides, we expect McCormick to deliver robust performance in the fourth quarter. Incidentally, the Zacks Consensus Estimate for earnings for the quarter under review is pegged at $1.69, which shows a 9.7% rise from $1.54 in the year-ago quarter. The estimate has remained unchanged in the past 30 days. Also, the Zacks Consensus Estimate for sales for the fourth-quarter is pegged at $1,550 million, depicting a rise of almost 4% from the prior-year quarter’s tally.

Zacks Model

Our proven model doesn’t show that McCormick is likely to beat estimates in the to-be-reported quarter. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though McCormick carries a Zacks Rank #1, its Earnings ESP of 0.00% makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000-2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



United Natural Foods, Inc. (UNFI): Free Stock Analysis Report

The J. M. Smucker Company (SJM): Get Free Report

McCormick & Company, Incorporated (MKC): Free Stock Analysis Report

TreeHouse Foods, Inc. (THS): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.