Could McCormick's 3Q17 Results Boost Its Stock?

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Part 5
Could McCormick's 3Q17 Results Boost Its Stock? PART 5 OF 5

What Analysts Recommend For McCormick Stock

Rating summary and target prices

Most analysts covering McCormick (MKC) have maintained a neutral stance, giving a consensus score of 2.8 on a scale of 1.0 (“strong buy”) to 5.0 (“strong sell”). Of the 14 analysts, 72% maintained a “hold” rating on McCormick stock, 21% recommended “buy,” and 7% recommended “sell.” The stock closed at $96.06 on September 22, reflecting a 5.7% upside based on analysts’ price target of $101.50 per share.

What Analysts Recommend For McCormick Stock

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Analysts have maintained a neutral stance on most other food stocks, as falling volumes and rising input costs pose a threat to food companies’ sales and earnings per share. Also, the industry’s softness is expected to continue, at least in the foreseeable future.

Of the 18 analysts providing ratings on J. M. Smucker (SJM) stock, 22% maintained a “buy” recommendation, 61% recommended “hold,” and 17% recommended “sell.” Meanwhile, 65% of analysts maintained a “hold” rating on General Mills (GIS) stock, 10% recommended “buy,” and 25% recommended “sell.” In contrast, analysts have a positive outlook on Conagra (CAG) stock, with 64% recommending “buy,” 22% recommending “hold,” and 14% recommending “sell.”

Valuation summary

McCormick stock is trading at a forward PE (price-to-earnings) ratio of 22.4x, which is higher than the S&P 500’s (SPX) forward PE of 18.1x. Moreover, McCormick’s valuation multiple is higher than the peer group average of 17.0x. As of September 22, 2017, J.M. Smucker, General Mills, Conagra Brands, and Kraft Heinz (KHC) were trading at forward PE multiples of 13.3x, 16.4x, 17.8x, and 20.7x, respectively.


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