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McCormick: Could It Spice Up Your Portfolio?

PART:
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Part 7
McCormick: Could It Spice Up Your Portfolio? PART 7 OF 7

How McCormick Is Trading Compared to Its Peers

Valuation summary

As of April 6, 2017, McCormick (MKC) was trading at a 12-month forward PE (price-to-earnings) ratio of 24.1x. That means that McCormick is trading at a premium to the forward PE ratios of the Consumer Staples Select Sector SPDR ETF (XLP) at 21.2x and the S&P 500 Index (SPX) at 18.4x.

How McCormick Is Trading Compared to Its Peers

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McCormick’s valuation multiple is higher than the peer average of 19.4x. As of April 6, 2017, General Mills (GIS), JM Smucker (SJM), and Kellogg (K) were trading at forward PE multiples of 16.4x, 17.8x, and 18.4x, respectively.

We should point out that the 12-month forward PE multiple tends to differ among companies based on the following factors: growth expectations, leverage, profitability, business model, and risk-return profiles.

Growth expectations

Analysts expect McCormick to generate revenues of $4.6 billion in fiscal 2017, which reflects a 3.4% rise year-over-year. McCormick’s strategic initiatives, including efficient marketing, distribution through channels, and product innovation, are likely to drive the company’s top-line results. Price restructuring and acquisitions are expected to boost fiscal 2017 sales by 3.0% and 2.0%, respectively.

Analysts expect the company’s fiscal 2017 adjusted EPS (earnings per share) to be $4.06, reflecting a 10.0% rise year-over-year. Management expects adjusted EPS to be $4.05–$4.13 in fiscal 2017.

For more updates, be sure to visit our Consumer Staples page.

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