Will CCI Plan Aid McCormick (MKC) Q2 Earnings Amid Cost Woes?

McCormick & Company, Inc. (NYSE:MKC) is slated to release second-quarter fiscal 2018 results on Jun 28. The Midland-based company has a positive earnings surprise record for the trailing four quarters, with a 9.9% beat delivered in the last reported quarter. Let’s see what’s in store for McCormick this time around.

What to Expect

The current Zacks Consensus Estimate for the quarter under review is pegged at 93 cents, which shows a 13.4% rise from 82 cents recorded in the year-ago period. The estimate has remained unchanged over the past 30 days. Further, analysts polled by Zacks expect revenues of $1.32 billion, up 18.1% from the year-ago reported figure.

McCormick & Company, Incorporated Price and EPS Surprise

McCormick & Company, Incorporated Price and EPS Surprise | McCormick & Company, Incorporated Quote

Factors Driving the Quarter

McCormick has been gaining from its focus on buyouts, product innovations, cost-containment measures and efficient marketing initiatives. These factors contributed to its robust results, in the last reported quarter, helping the company keep its earnings and sales streak alive for the fifth and fourth consecutive time, respectively. Favorable currency translation drove top-line growth in the previous quarter, which is expected to remain for a while now.

The company is on track with its Comprehensive Continuous Improvement (CCI) program that aims at cost savings and increased efficiency. Savings from the CCI program are being used by the company toward increasing investment that will further drive profits and sales.

Further, McCormick remains poised on strategic acquisitions that enhance its portfolio. The addition of Reckitt Benckiser (OTC:RBGLY) , including Frank's RedHot, French's Mustard and other well-known condiment brands into McCormick portfolio is likely to fuel the company’s performance.

However, the company is exposed to higher raw material cost inflation. The company's profits are under threat due to the stiff competition it faces from its peers, which may compel it to lower prices. High marketing and freight expense are also significant concerns, although increase in brand expense is likely to be cushioned by the CCI program.

What the Zacks Model Unveils

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

McCormick has an Earnings ESP of -1.89%, along with a Zacks Rank #4 (Sell). We caution against sell-rated stocks going into earnings announcement.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:

Helen of Troy (NASDAQ:HELE) , a Zacks #2 Ranked stock, has an Earnings ESP of +3.57%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Coco-Cola Company (NYSE:KO) , a Zacks #3 Ranked stock, has an Earnings ESP of +0.16%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early
investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>