McCormick Beat Its 3Q17 Earnings Estimate, Higher Guidance
EPS exceeds estimate
McCormick (MKC) posted stellar fiscal 3Q17[ended August 31, 2017] earnings on September 28, 2017. McCormick’s fiscal 3Q17 adjusted earnings of $1.12 per share exceeded analysts’ estimate of $1.05 and rose 8.7% YoY (year-over-year). Notably, the company beat analysts’ estimates in the past six out of seven quarters.
The company’s industry-leading sales growth and higher pricing to mitigate rising input costs combined with productivity and cost-saving measures drove its fiscal 3Q17 EPS (earnings per share). However, increased taxes and interest expenses remained a drag.
Interested in MKC? Don't miss the next report.
Receive e-mail alerts for new research on MKC
In comparison, Conagra Brands (CAG), which reported its fiscal 1Q18 results on September 28, 2017, had strong growth in its adjusted EPS from continuing operations. Conagra’s adjusted EPS rose 17.9% due to higher cost savings and increased earnings from joint ventures. Its EPS was partially offset by lower volumes.
Kraft Heinz (KHC) and Kellogg (K) also saw an improved bottom line performance due to tighter cost control measures amid soft sales.
In contrast, a continued fall in the volume and increased commodity costs are taking a toll on General Mills (GIS) and J.M. Smucker’s (SJM) performance. General Mills’ fiscal 1Q18 EPS fell 9% YoY due to higher input costs.
Given the stronger-than-expected fiscal 3Q17 results and projected rise in sales and cost savings in the upcoming quarter, management raised its fiscal 2017 EPS guidance. McCormick is expected to report adjusted earnings of $4.20–$4.24—up from its earlier guidance of $4.05–$4.13 per share. The new guidance reflects 9%–10% growth year-over-year including the 1% negative impact from currency fluctuations.
For fiscal 4Q17, McCormick’s adjusted EPS is expected to be $1.49–$1.53, which is up 17% to 20% compared to the same quarter last year.