Summary
- McCormick, the global leader in herbs and spices, didn’t end fiscal 2022 on the strongest footing.
- Current period results were held back by COVID-related disruptions in China, as well as by unexpectedly difficult comparisons to the prior year due to restocking trends.
- The Flavor Solutions segment held up better on sales growth, and is a promising future growth driver. But the segment is unprofitable.
- While recently announced cost cutting initiatives could improve earnings in 2023, the sales environment is likely to be hindered by greater switching to private-label brands.
- At 29x forward earnings, shares are currently valued near five-year averages and trade at a premium to the broader market index. The value proposition, therefore, appears limited.
McCormick (NYSE:MKC) is a global manufacturer in the marketing and distribution of cooking ingredients to the entire food industry, which includes retailers, other food manufacturers, and foodservice businesses.
Their products include spices, seasoning mixes, condiments, and other flavorful products. Currently, they have the number one market share position in herbs and spices.
