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McCormick & Co. Inc.(MKC - Analyst Report) is set to report first-quarter fiscal 2014 results before the opening bell on Mar 25. Last quarter, this global leader in spices and flavors posted a positive surprise of 0.84%. Let’s see how things are shaping up prior to the announcement.

Factors to Consider

McCormick has been growing its sales through brand marketing investments, innovation and acquisitions. The company’s acquisition of the Chinese broth maker Wuhan Asia-Pacific Condiments Co. Ltd. (‘WAPC’) in Jun 2013 enhanced McCormick’s product portfolio in central China. We believe the WAPC acquisition will contribute meaningfully to first quarter revenues. The company is expanding its footprint in the emerging markets, owing to the growing demand for branded packaged spices. We are also impressed with the company’s Comprehensive Continuous Improvement (‘CCI’) program, which is expected to yield annual cost savings of at least $45 million for 2014.

During the fourth quarter, McCormick’s earnings beat both the Zacks Consensus Estimate and the year-ago figure owing to higher adjusted operating income, lower interest expense and lower share count. Though revenue lagged the Zacks Consensus Estimate due to weak demand from quick service restaurants in the Americas region, it grew 2% year over year as both the consumer and industrial business segments witnessed positive results.

McCormick is optimistic on its consumer business as it expects growing demand for flavors in the coming years. The company also expects to increase industrial business sales and profit through new product development and international expansion. However, demand from quick service restaurants in the U.S. is expected to be weak in the first part of 2014.

Earnings Whispers?

Our proven model does not conclusively show that McCormick is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP: The Expected Surprise Prediction or ESP for McCormick is 0.00% as both the Zacks Consensus Estimate and Most Accurate Estimate stand at 58 cents per share.

Zacks Rank #3 (Hold): McCormick’s Zacks Rank #3 when combined with a 0.00% ESP makes surprise prediction difficult. We caution against stocks with Zacks Rank #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Other stocks in the consumer staples sector that have both a positive earnings ESP and a favorable Zacks Rank are:

Coca-Cola Enterprises Inc (CCE - Analyst Report), with an Earnings ESP of +4.55% and a Zacks Rank #2 (Buy).

General Mills, Inc. (GIS - Analyst Report), with an Earnings ESP of +1.43% and a Zacks Rank #3.

Kellogg Co (K - Analyst Report), with an Earnings ESP of +1.02% and a Zacks Rank #3.

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