McCormick posted stronger-than-expected bottom line results for the second quarter of fiscal 2019. McCormick’s adjusted EPS marked double-digit growth in the second quarter and handily exceeded analysts’ estimate on the back of higher volumes and pricing, cost savings, and a lower income tax rate.
Given its better-than-expected second-quarter earnings and strong first-half performance, McCormick’s management raised its full-year EPS guidance. Management now expects its fiscal 2019 adjusted EPS to be in the range of $5.20–$5.30, up from its earlier guidance of $5.17–$5.27.
This projected EPS range implies a YoY rise of 5%–7%. Wall Street expects McCormick to post adjusted EPS of $5.26 in fiscal 2019. Improved organic sales, cost savings, and a higher operating income are expected to support McCormick’s bottom line. However, adverse currency rates and a higher effective tax rate are likely to hurt it.
The company’s management reiterated its sales guidance and said that it expected its net sales to mark 1%–3% growth in fiscal 2019.
McCormick stock was trading ~1% lower in the premarket session following the company’s second-quarter results. It was up 8.2% on a year-to-date basis as of June 26. Growth in its base business has supported its stock so far this year. However, its high valuation and low sales and earnings growth rate could restrict its upside.