McCormick & Co., Inc. – Value Analysis (NYSE:MKC) : May 3, 2017

Capitalcube gives McCormick & Co., Inc. a score of 78.

Our analysis is based on comparing McCormick & Co., Inc. with the following peers – TreeHouse Foods, Inc., Conagra Brands, Inc., Hain Celestial Group, Inc., PepsiCo, Inc., Pinnacle Foods, Inc., B&G Foods, Inc., Tyson Foods, Inc. Class A, Tiger Brands Limited Sponsored ADR and Naturex SA Sponsored ADR (THS-US, CAG-US, HAIN-US, PEP-US, PF-US, BGS-US, TSN-US, TBLMY-US and NTUXY-US).

Investment Outlook

McCormick & Co., Inc. has a fundamental score of 78 and has a relative valuation of OVERVALUED.

Fundamental Score

Access our research and ratings on McCormick & Co., Inc.

Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • It currently trades at a Price/Book ratio of (6.50).
  • MKC-US‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • MKC-US has relatively high profit margins while operating with median asset turns.
  • Change in the company’s annual revenues seems to be coming at the expense of earnings.
  • MKC-US‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • MKC-US‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s level of capital investment is relatively low and suggests it is milking the business.
  • MKC-US has the financial and operating capacity to borrow quickly.

Access our research and ratings on McCormick & Co., Inc.

Leverage & Liquidity

MKC-US has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 12.22% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 21.13%), and a well-cushioned interest coverage level of 11.61x, MKC-US can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 9 peers for the company have an outstanding debt balance.

MKC-US has maintained its Quick & Able profile from the recent year-end.

  • MKC-US‘s interest coverage is its highest relative to the last five years and compares to a low of 10.01x in 2012.
  • Though its interest coverage has remained relatively stable at 11.61x compared to 2016, its peer median has decreased to 6.63x from 7.81x during this period.
  • Interest coverage rose 1.30 points relative to peers.
  • MKC-US‘s debt-EV is its highest relative to the last five years and compares to a low of 11.33% in 2016.
  • While its debt-EV increased to 12.22% from 11.33% (in 2016), its peer median decreased during this period to 21.13% from 21.71%.
  • Relative to peers, debt-EV rose 1.47 percentage points.

Access the detailed analysis for McCormick & Co., Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
TreeHouse Foods, Inc. 40.97 2.25 2.99 20.33
Conagra Brands, Inc. 14.96 1.62 5.2 37.32
Hain Celestial Group, Inc. 18.26 2.6 8.64 27.54
PepsiCo, Inc. 21.13 1.25 8.06 25.85
Pinnacle Foods, Inc. 30.76 1.62 2.95 13.83
B&G Foods, Inc. 37.47 2.67 3.73 12.8
Tyson Foods, Inc. Class A 21.89 1.6 12.19 44.52
Tiger Brands Limited Sponsored ADR 3.86 1.71 18.76 94.7
Naturex SA Sponsored ADR N/A 2.32 5.04 24.23
McCormick & Company, Incorporated 12.22 0.8 11.61 34.98
Peer Median 21.13 1.66 6.63 26.69
Best In Class 3.86 2.67 18.76 94.7

Looking for more metrics and analysis for McCormick & Co., Inc.?

Company Profile

McCormick & Co., Inc. manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the retail outlets, food manufacturers and foodservice businesses. The company operates its business through the following business segments: Consumer and Industrial. The Consumer business segment operates through the following brands McCormick, Lawry’s, Zatarain’s, Simply Asia, Thai Kitchen, Ducros, Vahine, Schwartz, Club House, Kamis, Kohinoor and DaQiao. The Industrial business segment sells to food manufacturers and the foodservice industry both directly and indirectly through distributors. McCormick was founded by Willoughby M. McCormick in 1889 and is headquartered in Sparks, MD.

Disclaimer

The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.