McCormick Crushed Its Fiscal 3Q17 Estimates, Stock Rose
McCormick stock rose 5.4%
On September 28, 2017, McCormick (MKC) stock rose 5.4% after the company’s better-than-expected fiscal 3Q17 earnings and upbeat outlook. McCormick beat analysts’ sales and EPS (earnings per share) estimates. Higher volumes, increased pricing, expanded distribution, and incremental sales from acquired brands boosted the company’s financials.
Meanwhile, the company’s favorable mix, improved productivity savings, and lower costs supplemented its margins and EPS.
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Given the company’s strong 3Q17 results, management raised its fiscal 2017 sales and EPS guidance, which should act as a catalyst for the company’s stock price. However, the challenging retail environment in the United Kingdom and economic headwinds in the Middle East and Africa are expected to remain a drag. Increased input costs and a planned increase in marketing spend could restrict the EPS growth.
YTD stock performance
As of September 28, 2017, McCormick stock has risen 8.9% on a YTD (year-to-date) basis. Most of the growth followed the company’s stellar fiscal 3Q17 earnings. The above graph shows that the company underperformed the S&P 500 Index (SPX-INDEX), which rose 12.1% during the same period.
Given McCormick’s healthy financials and upside to sales and profits, its stock could rise more.
So far, other food stocks have largely disappointed investors this year. On a YTD basis, J.M. Smucker (SJM), General Mills (GIS), Conagra (CAG), Kellogg (K), and Kraft Heinz (KHC) stock have fallen 17.9%, 15.4%, 14.2%, 14.8%, and 10.7%, respectively.