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Will McCormick (MKC) Disappoint Investors in Q4 Earnings?
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McCormick & Co., Inc. (MKC - Free Report) is set to report fourth-quarter 2016 results on Jan 25, before the market opens. Last quarter, this global leader in spices and flavors had posted a positive surprise of 8.42%.
In fact, the company has delivered positive earnings surprises in all the last four quarters, making for an average surprise of 4.47%.
Further, McCormick has been regularly launching products in order to remain competitive. Its increasing focus on cost savings as well as enhancing productivity through the ongoing initiative – the Comprehensive Continuous Improvement (‘CCI’) program – is encouraging and boosting earnings.
However, the company’s industrial segment has been reporting sluggish sales over the past few quarters, which is a serious concern. The company is facing sluggish sales, particularly in the Americas and Asia-Pacific, due to weak demand from quick service restaurants. The company also remains exposed to unfavorable foreign currency translations, particularly for its joint venture in Mexico. Higher material costs also remain a major headwind.
If we look into past six months performance, McCormick’s shares have underperformed the Zacks categorized Food-Miscellaneous/Diversified industry. The stock declined by 10.4% in comparison to the above mentioned industry’s decline of 6.5%. Notably, the industry is part of the bottom 40% of the Zacks Classified industries (159 out of the 265). The broader Consumer Staples sector is placed at the bottom most of the Zacks Classified sectors (16 out of 16).
Earnings Whispers
Our proven model does not conclusively show that McCormick is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. That is not the case here as you will see below.
Zacks ESP: ESP for McCormick is 0.00% as both the Most Accurate estimate and Zacks Consensus Estimate stand at $1.27 per share.
Zacks Rank: McCormick has a Zacks Rank #4 (Sell). As it is we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Stocks in the consumer staples sector that have both a positive earnings ESP and a favorable Zacks Rank are:
Lancaster Colony Corp. (LANC - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank #3.
Coty, Inc. (COTY - Free Report) has an Earnings ESP of +8.33% and a Zacks Rank #3.
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Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
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Will McCormick (MKC) Disappoint Investors in Q4 Earnings?
McCormick & Co., Inc. (MKC - Free Report) is set to report fourth-quarter 2016 results on Jan 25, before the market opens. Last quarter, this global leader in spices and flavors had posted a positive surprise of 8.42%.
In fact, the company has delivered positive earnings surprises in all the last four quarters, making for an average surprise of 4.47%.
McCormick & Co. Price, Consensus and EPS Surprise
McCormick & Co. Price, Consensus and EPS Surprise | McCormick & Co. Quote
Let us see how things are shaping up for this announcement.
Factors to Consider
McCormick’s focus on building sales through buyouts has been driving earnings since the past many years. The company completed the acquisition of Italy-based Enrico Giotti SpA (Giotti) in Dec 2016 and Australia-based Botanical Food Company in Apr 2016. 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 acquisitions have boosted McCormick’s business and strengthened its portfolio. In fact, the company has an optimistic view of the fourth quarter, owing to recent acquisitions.
Further, McCormick has been regularly launching products in order to remain competitive. Its increasing focus on cost savings as well as enhancing productivity through the ongoing initiative – the Comprehensive Continuous Improvement (‘CCI’) program – is encouraging and boosting earnings.
However, the company’s industrial segment has been reporting sluggish sales over the past few quarters, which is a serious concern. The company is facing sluggish sales, particularly in the Americas and Asia-Pacific, due to weak demand from quick service restaurants. The company also remains exposed to unfavorable foreign currency translations, particularly for its joint venture in Mexico. Higher material costs also remain a major headwind.
If we look into past six months performance, McCormick’s shares have underperformed the Zacks categorized Food-Miscellaneous/Diversified industry. The stock declined by 10.4% in comparison to the above mentioned industry’s decline of 6.5%. Notably, the industry is part of the bottom 40% of the Zacks Classified industries (159 out of the 265). The broader Consumer Staples sector is placed at the bottom most of the Zacks Classified sectors (16 out of 16).
Earnings Whispers
Our proven model does not conclusively show that McCormick is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. That is not the case here as you will see below.
Zacks ESP: ESP for McCormick is 0.00% as both the Most Accurate estimate and Zacks Consensus Estimate stand at $1.27 per share.
Zacks Rank: McCormick has a Zacks Rank #4 (Sell). As it is we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Stocks in the consumer staples sector that have both a positive earnings ESP and a favorable Zacks Rank are:
Monster Beverage Corp. (MNST - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lancaster Colony Corp. (LANC - Free Report) has an Earnings ESP of +1.45% and a Zacks Rank #3.
Coty, Inc. (COTY - Free Report) has an Earnings ESP of +8.33% and a Zacks Rank #3.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>