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McCormick (MKC) Gains on Prudent Buyouts & Cost Savings
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McCormick & Company (MKC - Free Report) strategically expanded its presence through acquisitions to boost its portfolio. The company’s Global Operating Effectiveness (“GOE”) Program holds promise. Its brand strength, increased brand marketing and innovation are yielding. Management is focused on capitalizing on long-term consumer trends, higher digital usage, trusted brands, healthy and flavorful cooking and purpose-inclined practices.
The factors mentioned above boosted McCormick’s second-quarter fiscal 2023 results, with the top and the bottom line increasing year over year. Solid results, expectations of solid demand and focus on the cost structure encouraged management to raise its adjusted operating income and earnings per share (EPS) view for fiscal 2023.
Let’s delve deeper.
Impressive Performance & View
In the second quarter of fiscal 2023, McCormick’s adjusted earnings of 60 cents per share increased 25%. The year-over-year increase was a result of elevated adjusted operating income. The company generated sales of $1,659.2 million, up 8%. Constant-currency (cc) sales increased 10% on an 11% growth from pricing actions.
Image Source: Zacks Investment Research
The Zacks Rank #2 (Buy) company anticipates fiscal 2023 to witness a solid underlying business performance, backed by sales growth. It expects the GOE Program and the lapping of pandemic-led hurdles to have a positive effect on the fiscal 2023 operating income.
For fiscal 2023, net sales are expected to increase 5-7% from the fiscal 2022 levels. Management expects sales growth to be fueled by pricing actions, which, along with cost savings, are likely to help it counter inflationary headwinds. The company anticipates seeing solid growth via brand strength, brand marketing, new products, category management and differentiated customer engagement. The adjusted operating income is likely to grow 10-12%, up from the prior guidance of 9-11% growth. Management envisions fiscal adjusted EPS in the band of $2.60-$2.65 compared with the earlier view of $2.56-$2.61. The bottom-line view suggests growth from $2.53 recorded in fiscal 2022.
Acquisitions: Key Driver
McCormick is on track with prudent buyouts to fuel growth. In December 2020, the company bought a 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick also completed the acquisition of the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand. McCormick believes that the buyout of Cholula accelerates its growth potential across the condiment platform and widens the product portfolio in the hot sauce category.
Cost-Saving Efforts
McCormick focuses on saving costs and enhancing productivity through its ongoing Comprehensive Continuous Improvement (CCI) program. Started in 2009, McCormick’s CCI program helped the company to reduce costs and enhance productivity. It has used CCI savings to increase investments, thereby leading to higher sales and profits.
The GOE program aims at optimizing the company’s supply chain and cost structure. McCormick expects savings from its GOE program to scale up as fiscal 2023 progresses. It expects savings from the GOE program to have an 800-basis point impact on adjusted operating profit growth in fiscal 2023. Savings from the CCI program are likely to be $85 million in fiscal 2023.
Such cost savings and the aforementioned upsides are likely to continue enhancing MKC’s profits in the future.
The company’s stock has increased 3% in the past three months against the industry’s 3.2% decline.
Other Solid Bets
Here we have highlighted other three top-ranked stocks, namely TreeHouse Foods, Inc. (THS - Free Report) , Lamb Weston Holdings (LW - Free Report) and Celsius Holdings (CELH - Free Report) .
TreeHouse Foods, a manufacturer of packaged foods and beverages, currently sports a Zacks Rank #1 (Strong Buy). THS has a trailing four-quarter earnings surprise of 49.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TreeHouse Foods’ current financial-year sales suggests decline of 12.4%, from the year-ago reported numbers.
Lamb Weston, a leading supplier of frozen potato, sweet potato, appetizer and vegetable products to restaurants and retailers worldwide, currently carries a Zacks Rank #2 (Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 29.6% and 117.3%, respectively, from the year-ago reported numbers. The expected EPS growth rate for three to five years is 42.7%.
Celsius Holdings, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 81.8% in the last reported quarter.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings suggests growth of 69.6% and 154.4%, respectively, from the year-ago reported numbers.
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McCormick (MKC) Gains on Prudent Buyouts & Cost Savings
McCormick & Company (MKC - Free Report) strategically expanded its presence through acquisitions to boost its portfolio. The company’s Global Operating Effectiveness (“GOE”) Program holds promise. Its brand strength, increased brand marketing and innovation are yielding. Management is focused on capitalizing on long-term consumer trends, higher digital usage, trusted brands, healthy and flavorful cooking and purpose-inclined practices.
The factors mentioned above boosted McCormick’s second-quarter fiscal 2023 results, with the top and the bottom line increasing year over year. Solid results, expectations of solid demand and focus on the cost structure encouraged management to raise its adjusted operating income and earnings per share (EPS) view for fiscal 2023.
Let’s delve deeper.
Impressive Performance & View
In the second quarter of fiscal 2023, McCormick’s adjusted earnings of 60 cents per share increased 25%. The year-over-year increase was a result of elevated adjusted operating income. The company generated sales of $1,659.2 million, up 8%. Constant-currency (cc) sales increased 10% on an 11% growth from pricing actions.
Image Source: Zacks Investment Research
The Zacks Rank #2 (Buy) company anticipates fiscal 2023 to witness a solid underlying business performance, backed by sales growth. It expects the GOE Program and the lapping of pandemic-led hurdles to have a positive effect on the fiscal 2023 operating income.
For fiscal 2023, net sales are expected to increase 5-7% from the fiscal 2022 levels. Management expects sales growth to be fueled by pricing actions, which, along with cost savings, are likely to help it counter inflationary headwinds. The company anticipates seeing solid growth via brand strength, brand marketing, new products, category management and differentiated customer engagement. The adjusted operating income is likely to grow 10-12%, up from the prior guidance of 9-11% growth. Management envisions fiscal adjusted EPS in the band of $2.60-$2.65 compared with the earlier view of $2.56-$2.61. The bottom-line view suggests growth from $2.53 recorded in fiscal 2022.
Acquisitions: Key Driver
McCormick is on track with prudent buyouts to fuel growth. In December 2020, the company bought a 100% stake in FONA International, LLC and some of its affiliates. FONA’s diverse portfolio helps McCormick bolster its value-add offerings and expand the flavor solutions segment into attractive categories. In November 2020, McCormick also completed the acquisition of the parent company of Cholula Hot Sauce — a premium Mexico-based hot sauce brand. McCormick believes that the buyout of Cholula accelerates its growth potential across the condiment platform and widens the product portfolio in the hot sauce category.
Cost-Saving Efforts
McCormick focuses on saving costs and enhancing productivity through its ongoing Comprehensive Continuous Improvement (CCI) program. Started in 2009, McCormick’s CCI program helped the company to reduce costs and enhance productivity. It has used CCI savings to increase investments, thereby leading to higher sales and profits.
The GOE program aims at optimizing the company’s supply chain and cost structure. McCormick expects savings from its GOE program to scale up as fiscal 2023 progresses. It expects savings from the GOE program to have an 800-basis point impact on adjusted operating profit growth in fiscal 2023. Savings from the CCI program are likely to be $85 million in fiscal 2023.
Such cost savings and the aforementioned upsides are likely to continue enhancing MKC’s profits in the future.
The company’s stock has increased 3% in the past three months against the industry’s 3.2% decline.
Other Solid Bets
Here we have highlighted other three top-ranked stocks, namely TreeHouse Foods, Inc. (THS - Free Report) , Lamb Weston Holdings (LW - Free Report) and Celsius Holdings (CELH - Free Report) .
TreeHouse Foods, a manufacturer of packaged foods and beverages, currently sports a Zacks Rank #1 (Strong Buy). THS has a trailing four-quarter earnings surprise of 49.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TreeHouse Foods’ current financial-year sales suggests decline of 12.4%, from the year-ago reported numbers.
Lamb Weston, a leading supplier of frozen potato, sweet potato, appetizer and vegetable products to restaurants and retailers worldwide, currently carries a Zacks Rank #2 (Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current financial-year sales and earnings suggests growth of 29.6% and 117.3%, respectively, from the year-ago reported numbers. The expected EPS growth rate for three to five years is 42.7%.
Celsius Holdings, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 81.8% in the last reported quarter.
The Zacks Consensus Estimate for Celsius Holdings’ current fiscal-year sales and earnings suggests growth of 69.6% and 154.4%, respectively, from the year-ago reported numbers.