What to Expect from McCormick’s Q4 Results



What analysts project

McCormick (MKC) is scheduled to announce its fourth-quarter results on Thursday, January 24. Wall Street analysts expect McCormick will sustain top-line and bottom-line growth momentum into the fourth quarter. However, the rate of top-line growth is expected to decelerate sequentially, as the company annualized its acquisition of Frank’s and French’s brands.

Analysts expect McCormick’s top line to gain from the continued strength in the underlying core business. New products, innovation, brand marketing, and expanded distribution are expected to drive fourth-quarter revenues.

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McCormick’s profit margins are likely to benefit from higher pricing and a mix shift towards value-added products. However, inflation in commodities could remain a drag. Analysts expect McCormick’s fourth-quarter EPS to continue to grow at a double-digit rate thanks to the improvement in the underlying business, expansion in margins, and lower effective tax rate. However, increased interest expenses and higher outstanding share count are expected to affect the bottom-line growth rate in the fourth quarter.

Stock performance

McCormick stock, which outperformed other food stocks with stellar 36.6% returns in 2018, started the current year on a softer note. McCormick stock is trading up about 1% so far this year as of January 17. Meanwhile, other major food stocks have started the year on a stronger note with General Mills (GIS), J.M. Smucker (SJM), Kraft Heinz (KHC), Campbell Soup (CPB), and Kellogg (K) stock gaining 10.3%, 11.4%, 9.4%, 8.5%, and 4.0%, respectively, on a YTD basis.


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