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On Wednesday, Stifel analysts reaffirmed their Hold rating on McCormick & Company shares (NYSE:MKC), maintaining a price target of $82.00. The analysts highlighted McCormick’s strong first-quarter performance, which included a 2% increase in organic sales and a 20 basis point gross margin expansion. Despite earnings per share (EPS) of $0.60 falling $0.04 short of both Stifel’s estimate and the consensus, the analysts believe that the discrepancy was mainly due to expense timing and aligned with the company’s own projections.
McCormick’s revenue growth stands out in the food industry, with the reported 2% organic sales growth being driven by more than 2% volume/mix growth. The company has reaffirmed its full-year 2025 guidance for revenue and profitability. Stifel continues to project a fiscal year 2025 EPS of $3.05, which would represent a growth of over 3%, fully supported by a stronger profit performance in the latter half of the year. This anticipated growth is expected as McCormick moves past a period of heavy investment spending and starts to realize the benefits from Comprehensive Continuous Improvement (CCI) savings. The company’s financial health appears solid, with InvestingPro data showing a healthy gross profit margin of 38.6% and a return on equity of 15%.
The analysts’ ongoing Hold rating and $82 price target reflect their view that McCormick’s volume-led revenue growth and improving profitability are impressive compared to its peers, justifying the company’s premium valuation. They note that McCormick’s financial results and strategic initiatives indicate a solid trajectory in the food sector, with the company expected to build on its strengths in the coming years. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value, with analyst targets ranging from $67 to $101 per share.Discover McCormick’s complete financial story with InvestingPro’s comprehensive research report, part of our coverage of 1,400+ US stocks.
In other recent news, McCormick & Company reported its Q1 2025 earnings, revealing earnings per share (EPS) of $0.60, which fell short of the projected $0.64. The company’s revenue, however, aligned with expectations at $1.61 billion. Despite the earnings miss, McCormick experienced a 2% increase in total organic sales, driven by a 3% rise in its Flavor Solutions segment and a 1% increase in its Consumer segment. The company continues to outperform private labels and gain market share in spices, seasonings, and recipe mixes. McCormick maintains its full-year adjusted EPS guidance between $3.03 and $3.08, with expectations for organic sales growth of 1-3% for the year. CEO Brendan Foley highlighted the company’s proactive approach to reformulation, reflecting its commitment to meet evolving consumer demands and regulatory changes. Additionally, McCormick is focusing on trends like hydration and functional foods, indicative of the broader industry movement toward products with additional health benefits. These developments come amidst ongoing cost pressures that have impacted operating income, with adjusted operating income declining by 5% during the quarter.
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