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McCormick & Co., Inc.(MKC - Free Report) has completed the acquisition of 100% of the shares of Italy-based Enrico Giotti SpA (Giotti) for approximately €120 million ($127 million). The company used cash and short term borrowings to finance the deal, which was announced on Nov 29.
Located in Florence, Italy, Giotti is popular for its innovative beverage, sweet, savory and dairy flavor applications. It generates net annual sales of around €53 million ($56 million).
The acquisition of Giotti will complement McCormick’s business, which involves supplying flavors to packaged food companies and multi-national restaurants. Further, it will help boost McCormick's industrial segment with value-added products, including additional expertise in flavoring health and nutrition products. Further, this acquisition will strengthen its industrial segment business in the Europe, Middle East and Africa region. The acquisition is expected to be fully accretive to 2018 earnings.
We note that McCormick, known for its spices and Lawry's seasonings, has been strategically increasing its presence through acquisitions in order to expand its spices and seasonings portfolio. In the emerging markets too, the company has extended its reach where it has little or no distribution.
McCormick has been witnessing rising demand for spices, herbs and seasonings over the last few years, which is boosting its sales. Product innovation, brand marketing support and expanded distribution, as well as pricing actions led to sales growth, offsetting the negative impact of material costs and currency.
In fact, McCormick’s stock price history reveals that the company has been performing quite well over the past one year. Since the past one year, the company’s stock has risen 8.9%, outperforming the Zacks categorized Consumer Staples sector, which showcased growth of just 0.5%.
The stock has a long-term earnings per share growth rate of 8.8% and a beta value of 0.46. Further, the stock earns a return on equity of 27.26%, better than companies like Post Holdings, Inc. (POST - Free Report) , Flower Foods, Inc. (FLO - Free Report) in the same industry space.
We expect the aforementioned factors to help the company sustain its strong momentum and stay afloat even amid difficult times. Hence, we suggest investors to hold on to the stock as the rest is a wait-and-watch story.
Ingredion has an average positive earnings surprise of 10.5% in the trailing four quarters. It also has a long-term earnings growth rate of 11.00%.
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McCormick Closes Enrico Giotti Acquisition, Boosts Portfolio
McCormick & Co., Inc.(MKC - Free Report) has completed the acquisition of 100% of the shares of Italy-based Enrico Giotti SpA (Giotti) for approximately €120 million ($127 million). The company used cash and short term borrowings to finance the deal, which was announced on Nov 29.
Located in Florence, Italy, Giotti is popular for its innovative beverage, sweet, savory and dairy flavor applications. It generates net annual sales of around €53 million ($56 million).
The acquisition of Giotti will complement McCormick’s business, which involves supplying flavors to packaged food companies and multi-national restaurants. Further, it will help boost McCormick's industrial segment with value-added products, including additional expertise in flavoring health and nutrition products. Further, this acquisition will strengthen its industrial segment business in the Europe, Middle East and Africa region. The acquisition is expected to be fully accretive to 2018 earnings.
We note that McCormick, known for its spices and Lawry's seasonings, has been strategically increasing its presence through acquisitions in order to expand its spices and seasonings portfolio. In the emerging markets too, the company has extended its reach where it has little or no distribution.
In Apr 2016, the company acquired Australia-based Botanical Food Company, which is the seller of the Gourmet Garden brand of packaged herbs. In 2015, the company acquired One World Foods, the seller of Stubb's barbeque sauces in August, after Drogheria & Alimentari in May and Brand Aromatics in March. These three acquisitions boosted 2015 sales by 1%.
McCormick has been witnessing rising demand for spices, herbs and seasonings over the last few years, which is boosting its sales. Product innovation, brand marketing support and expanded distribution, as well as pricing actions led to sales growth, offsetting the negative impact of material costs and currency.
In fact, McCormick’s stock price history reveals that the company has been performing quite well over the past one year. Since the past one year, the company’s stock has risen 8.9%, outperforming the Zacks categorized Consumer Staples sector, which showcased growth of just 0.5%.
The stock has a long-term earnings per share growth rate of 8.8% and a beta value of 0.46. Further, the stock earns a return on equity of 27.26%, better than companies like Post Holdings, Inc. (POST - Free Report) , Flower Foods, Inc. (FLO - Free Report) in the same industry space.
We expect the aforementioned factors to help the company sustain its strong momentum and stay afloat even amid difficult times. Hence, we suggest investors to hold on to the stock as the rest is a wait-and-watch story.
Zacks Rank
McCormick currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the food industry is Ingredion, Inc. (INGR - Free Report) , holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ingredion has an average positive earnings surprise of 10.5% in the trailing four quarters. It also has a long-term earnings growth rate of 11.00%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>