Earnings Preview: McCormick - Analyst Blog
January 22 2013 - 7:30AM
Zacks
McCormick & Company, Inc. (MKC) is set to
report fiscal fourth-quarter 2012 results before the opening bell
on Jan 24. Last quarter, this global leader in flavors posted a
2.63% positive surprise. Let’s see how things are shaping up prior
to the announcement.
Growth Factors this Past Quarter
McCormick’s cost saving initiatives, brand building investments
and its growing presence in both the developed as well as the
emerging markets have been the driving factors for this
company.
The deals of 2011 (acquisitions of the U.S.-based Kitchen
Basics, Inc. and Poland-based Kamis S.A and the joint venture with
India-based Kohinoor Foods Ltd.) contributed significantly to sales
growth in all the three quarters of fiscal 2012. In addition, the
company anticipates expanding in China with the acquisition of
Wuhan Asia-Pacific Condiments Co., Ltd. by mid-2013. Further,
McCormick’s cost saving initiative, namely Comprehensive Continuous
Improvement (‘CCI’) program, has remained very effective to fight
the rising input costs and also allow increased brand buildings
investments.
Growth Prospects in Fourth Quarter
For the upcoming quarter, McCormick will roll out new products
like Hispanic rice mixes, frozen Simply Asia entrées and a holiday
multi-pack of small-size Extracts to improve its portfolio of
spices. Further, we believe that the cost saving initiatives and
the upcoming acquisition in China will remain fruitful.
Despite the sluggish U.S. economy, currency headwinds and rising
input costs, the company remains impressed with its strong brand
portfolio, geographic acquisitions and ccost saving
initiatives.
Other Stock to Consider
For a specialty food company worth considering, our model
suggests that a stock needs to have both a positive Earnings
Expected Surprise Prediction (ESP) (Read: Zacks Earnings ESP: A
Better Method) and a Zacks Rank of #1, 2 or 3.
Flowers Foods Inc. (FLO), Earnings ESP of
+4.00% and Zacks Rank #1 (Strong Buy)
ESP stands for Expected Surprise Prediction, which represents
the difference between the Most Accurate estimate and the Zacks
Consensus Estimate.
McCormick carries a Zacks Rank #3 (Hold). Other specialty food
companies include B&g Foods Inc (BGS) and
Ingredion Inc (INGR), which are better positioned
than McCormick and carry a Zacks Rank #1. Peers like
Campbell Soup Co. (CPB) hold a Zacks Rank #2
(Buy).
B&G FOODS CL-A (BGS): Free Stock Analysis Report
CAMPBELL SOUP (CPB): Free Stock Analysis Report
FLOWERS FOODS (FLO): Free Stock Analysis Report
INGREDION INC (INGR): Free Stock Analysis Report
MCCORMICK & CO (MKC): Free Stock Analysis Report
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