McCormick & Co Inc (MKC.V) stock analysis

P/E below its 5-year median

McCormick's P/E of 8.6 is below its own 5-year median of 27.7.

P/E below the industry

McCormick's P/E of 8.6 is below the Food and Kindred Products median of 20.8.

EV/EBITDA below its 5-year median

McCormick's EV/EBITDA of 13.8 is below its 5-year median of 20.3.

P/B below the industry

McCormick's price-to-book of 1.82 is below the Food and Kindred Products median of 2.02.

Trading below fair value

The share price of $47.29 is below our fair value estimate of $90.06.

Margin of safety over 20%

The price is 47.5% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew 2.5% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew 5.2% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 91.6% over the last twelve months, against a 5-year average of 1.1% a year.

Growing faster than the industry

Revenue grew 13.2% over the last twelve months; the Food and Kindred Products median is 2.7%.

Guidance lowered

McCormick lowered its fiscal 2026 Organic sales growth outlook on Oct 1, 2026.

Gross margin improving

Gross margin was 39.1% over the last twelve months, against 38.2% a year earlier.

Return on equity over 15%

Return on equity was 23.4% over the last twelve months and averaged 15.3% over five years.

Return on capital under 10%

Return on invested capital was 6.9%, below the 10% that usually covers the cost of capital.

Return on equity above the industry

McCormick's return on equity of 23.4% is above the Food and Kindred Products median of 4.9%.

Earnings grew over 5 years

Net income grew 1.1% a year on average over the last five fiscal years.

Net margin above its 5-year average

Net margin was 19.4% over the last twelve months, against a 5-year average of 11.2%.

Net margin above the industry

McCormick's net margin of 19.4% is above the Food and Kindred Products median of 2.0%.

High debt

Debt is 71.7% of shareholders' equity, above the 40% we consider low.

Debt falling against equity

Debt to equity fell from 125% five years ago to 71.7%.

Debt covered by cash flow

Operating cash flow over the last twelve months equals 22.7% of total debt.

Interest not well covered

Operating income covers interest expense 4.6 times; we look for at least 5.

Short-term assets don't cover short-term debts

Current assets are 0.66 times current liabilities.

Bankruptcy risk in the grey zone

The Altman Z-score is 1.80; above 3 is the safe zone and below 1.8 the distress zone.

Pays a dividend

McCormick paid dividends worth 4.1% of the share price over the last twelve months.

Yield below Treasuries

The 4.1% yield is below the 4.4% on a 1-year Treasury.

Yield in the top quarter

The top quarter of US dividend payers yield 4.0% or more; McCormick yields 4.1%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 34.1% of net income.

Covered by free cash flow

Dividends take 54.8% of free cash flow.