Here's What to Expect When McCormick & Co.(MKC) Releases Earnings Wednesday

NEW YORK (TheStreet) -- Shares of McCormick & Co. Inc (MKC) closed up 0.97% to $80.95 on double its average trading volume in Tuesday's regular trading session, one day ahead of the spices maker's latest earnings report, due out before the opening bell Wednesday.

For the fiscal second-quarter, the company is expected to earn 68 cents per share on revenue of $1.038 billion, according to analysts polled by Thomson Reuters.

In the same quarter of last year, the company earned 64 cents per share on sales of $1.033 billion.

Sparks, Md.-based McCormick & Co manufactures, markets and distributes spices, seasoning mixes, condiments and other products to the food industry.

The company operates under two business segments including consumer and industrial. 

Separately, TheStreet Ratings team rates MCCORMICK & CO INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MCCORMICK & CO INC (MKC) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 11.2%. Since the same quarter one year prior, revenues slightly increased by 1.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Food Products industry and the overall market, MCCORMICK & CO INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • Net operating cash flow has increased to $95.90 million or 25.03% when compared to the same quarter last year. Despite an increase in cash flow of 25.03%, MCCORMICK & CO INC is still growing at a significantly lower rate than the industry average of 76.82%.
  • The debt-to-equity ratio is somewhat low, currently at 0.79, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.38 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • You can view the full analysis from the report here: MKC Ratings Report

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