McCormick & Company, NYSE: MKC, Reports EPS Of $0.73, First Quarter 2016 Earnings

McCormick & Company, Incorporated (NYSE: MKC) released its first quarter 2016 financial results this morning. Highlights included gross revenues rising by two percent, in line with the Wall Street analyst estimate consensus of $1.03 billion; estimates ranged from $1.01 billion to $1.04 billion. McCormick reports that without unfavorable currency movements, sales would have increased by seven percent. The spice and flavorful products company reported earnings per share of $0.73 beating the analyst consensus of $0.69 by 5.8 percent.

McCormick’s EPS numbers reflect year-over-year growth of 4.3 percent.

The company reports an adjustment to its 2016 financial outlook.

“McCormick adjusted its financial outlook for fiscal year 2016 as it now expects a lower impact from unfavorable foreign currency exchange rates.”

“The company plans to grow sales 4% to 6% in constant currency, driven by base business increases, new products, pricing and acquisitions completed in 2015. Including the estimated impact of unfavorable currency rates, projected sales growth is 1% to 3%.”

Management will be hosting a conference call, scheduled for 8 a.m. ET.

Going into the report, MKC EPS estimates had been cut from $0.74, 90 days ago, to $0.69 today, as reported by Yahoo Finance, a reduction of 6.75 percent.

For the second quarter of 2016, that analyst consensus is for MKC EPS of $0.74, down 1.33 percent from $0.75, 90 days ago. Full year-2016 and -2017 EPS is forecast at $3.69 and $4.08 in each year; 2016 figures have been cut by $0.06 over the past 90 days, or 1.6 percent; 2017 figures have been taken down by $0.04, or 1.0 percent.

Shares in McCormick have been traded publicly since January 1979, according to CrunchBase. Over the past 10 years, MKC stock has appreciated in value by 178.45 percent; the Dow Jones Industrial Average (^DJI) returned 54.18 percent over the same period. Over the past five years, MKC shares have returned 106.58 percent, compared with 41.58 percent for the Dow, and over the past 12-month period, MKC stock is up 24.35 percent, compared with a loss of 2.54 percent for the broad market, as measured by the Dow.

Over the past 52 weeks, MKC stock has traded in a range bounded by a low of $75.11 and a high of just above $97, printed yesterday. MKC shares have been rising steadily since the beginning of 2016, and are up 13.22 percent year-to-date.

Zacks has noted that recent strength in McCormick shares may be related to the company’s offer to buy Premier Foods PLC.

At the close of the 2015-fiscal year, McCormick reported a trailing twelve-month profit margin of 9.35 percent and an operating margin of 14.37 percent. The company booked a strong return on equity of 22.97 percent.

McCormick reported holding a total of $115.10 million in cash and owing $1.4 billion in debt, as of November 30, 2015. The spice producer carries a debt to equity ratio of 82.77 percent.

McCormick has eight outstanding debt issues, as reported by Morningstar. The most recent to come due is $250 million in December 2017, with another $250 million coming due in July 2021. The balance comes due between 2023 and 2025.

MKC shares pay an annual dividend of $1.72, currently yielding close to 1.78 percent.

The company is a member of the “Processed & Packaged Goods” industry, is headquartered in Sparks, Maryland, and is staffed by 10,000 full-time employees. McCormick is run by Executive Chairman Alan Wilson, Chief Executive Officer Lawrence Kurzius, and Chief Financial Officer Gordon Stetz, who received pay of $2.66 million, $1.33 million, and $1.11 million respectively. Mr. Stetz also exercised $1.17 million worth of stock.

Eight research firms publish buy and sell recommendations on MKC shares. Their consensus is a rating of 3.0, where 1.0 is a strong buy and 5.0 is a strong sell. The average of price targets published by the firms is $87.75. Targets range between $74 and $100.

MKC shares have been downgraded at least twice in 2016: from “buy” to “hold” with BB&T Capital Mkts, and “neutral” to “underweight” with JP Morgan.

Major institutional holders of McCormick stock include The Vanguard Group with 10.2 million shares, valued at $879 million, or 8.91 percent of shares outstanding; State Farm Mutual Automobile Insurance, with 8.18 percent; State Street Corporation, with 6.04 percent; Goldman Sachs Group, with 3.75 percent; and BlackRock Institutional Trust Company, with 2.92 percent.

[Photo by Spencer Platt/Getty Images]