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McCormick (MKC) to Report Q4 Earnings: What's in Store?

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McCormick & Company, Incorporated (MKC - Free Report) is likely to register an increase in the top line when it reports fourth-quarter fiscal 2020 numbers on Jan 28, before market open. The Zacks Consensus Estimate for fiscal fourth-quarter revenues is pegged at $1.58 billion, which indicates a rise of 6.6% from the prior-year quarter’s reported figure. For fiscal 2020, the consensus mark for revenues stands at $5.63 billion.

The company’s bottom line is expected to be in line with the year-ago quarter’s reported figure in the fiscal fourth quarter. The Zacks Consensus Estimate has remained unchanged in the past 30 days at 81 cents per share. For fiscal 2020, the Zacks Consensus Estimate for earnings is pegged at $2.85 per share, which suggests an increase of 6.3% from the prior-year quarter’s reported figure.

Notably, McCormick delivered an earnings surprise of 0.7% in the last reported quarter. Also, this spices, seasonings, specialty foods and flavors provider has a trailing four-quarter earnings surprise of 7.8%, on average.

 

Key Factors to Note

McCormick’s Consumer Business segment sales have been benefiting from higher demand stemming from increased at-home consumption and cooking amid the coronavirus outbreak. In the last earnings call, management stated that it anticipates at-home consumption trends to remain favorable owing to the ongoing pandemic. Moreover, new product introductions, brand marketing as well as expanded distribution are likely to have had a favorable impact on sales during the fourth quarter. Incidentally, the company anticipates sales growth in the higher end of 4-5% (up 5-6% at constant currency) on a year-over-year basis in fiscal 2020. Further, adjusted earnings are expected in the range of $5.64-$5.72, reflecting a rise of 5-7% (up 6-8% at cc) from $5.35 delivered in the year-ago period.

Apart from this, the company’s focus on lucrative acquisitions has been yielding favorably. Also, the company’s commitment toward cost saving and productivity enhancement through its Comprehensive Continuous Improvement program have been noteworthy.

However, McCormick’s Flavors Solution segment has been under pressure due to sales declines to branded foodservice consumers as well as quick-service restaurant customers amid the pandemic-led social distancing practices. Also, the company’s international presence exposes it to risks associated with adverse currency movements. This was noticed in the third quarter of fiscal 2020, wherein unfavorable currency fluctuations affected McCormick’s top line by 1%.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for McCormick this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

McCormick carries a Zacks Rank #3 and an Earnings ESP of -2.23%.

Stocks With Favorable Combinations

Here are some companies that you may want to consider as our model shows that these also have the right combination of elements to post an earnings beat.

Tyson Foods (TSN - Free Report) currently has an Earnings ESP of +15.2% and a Zacks Rank of 3.You can see the complete list of today’s Zacks #1 Rank stocks here.

Estee Lauder (EL - Free Report) currently has an Earnings ESP of +0.55% and carries a Zacks Rank #3.

Altria (MO - Free Report) currently has an Earnings ESP of +0.14% and carries a Zacks Rank #3.

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