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What's in Store for McCormick & Co. (MKC) in Q2 Earnings?
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McCormick & Co., Inc.(MKC - Free Report) is set to report second-quarter 2016 results on Jun 30, before the market opens. Last quarter, this global leader in spices and flavors posted a positive surprise of 7.25%.
In fact, the company has delivered positive earnings surprises in three of the last four quarters, making for an average surprise of 4.02%.
Let us see how things are shaping up for this announcement.
Factors to Consider
McCormick has been witnessing rising demand for spices, herbs and seasonings over the last few years. Further, its focus on building sales through acquisitions has been driving its earnings. Keeping up the trend of acquisitions, in Apr 2016, McCormick acquired Australia-based Botanical Food Company, the seller of the Gourmet Garden brand of packaged herbs. Gourmet Garden is a global market leader in chilled convenient packaged herbs. In fact, the company has an optimistic view of the second quarter, owing to recent acquisitions and strong sales momentum.
Further, McCormick has also been regularly launching new products in order to remain competitive. Its increasing focus on higher pricing and cost savings and enhancing productivity through its ongoing initiative, the Comprehensive Continuous Improvement (‘CCI’) program is also encouraging.
However, earnings per share in the second quarter of 2016 are expected to be slightly below adjusted earnings per share of 75 cents in the second quarter of 2015. While the company anticipates strong sales growth and further improvement in gross profit margin, additional brand marketing expenses in the second quarter, along with an increase in the tax rate will likely hurt earnings growth.
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, 2 or 3 for this to happen. 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 74 cents per share.
Zacks Rank: McCormick has a Zacks Rank #3 (Hold), which when combined with an ESP of 0.00% 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.
Stocks to Consider
Stocks in the consumer staples sector that have both a positive earnings ESP and a favorable Zacks Rank are:
Molson Coors Brewing Company (TAP - Free Report) with an Earnings ESP of +0.86% and a Zacks Rank #1 (Strong Buy).
Nu Skin Enterprises, Inc. (NUS - Free Report) with an Earnings ESP of +2.60% and a Zacks Rank #1.
Time, Inc. (TIME - Free Report) with an Earnings ESP of +31.25% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
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What's in Store for McCormick & Co. (MKC) in Q2 Earnings?
McCormick & Co., Inc.(MKC - Free Report) is set to report second-quarter 2016 results on Jun 30, before the market opens. Last quarter, this global leader in spices and flavors posted a positive surprise of 7.25%.
In fact, the company has delivered positive earnings surprises in three of the last four quarters, making for an average surprise of 4.02%.
MCCORMICK & CO Price and EPS Surprise
MCCORMICK & CO Price and EPS Surprise | MCCORMICK & CO Quote
Let us see how things are shaping up for this announcement.
Factors to Consider
McCormick has been witnessing rising demand for spices, herbs and seasonings over the last few years. Further, its focus on building sales through acquisitions has been driving its earnings. Keeping up the trend of acquisitions, in Apr 2016, McCormick acquired Australia-based Botanical Food Company, the seller of the Gourmet Garden brand of packaged herbs. Gourmet Garden is a global market leader in chilled convenient packaged herbs. In fact, the company has an optimistic view of the second quarter, owing to recent acquisitions and strong sales momentum.
Further, McCormick has also been regularly launching new products in order to remain competitive. Its increasing focus on higher pricing and cost savings and enhancing productivity through its ongoing initiative, the Comprehensive Continuous Improvement (‘CCI’) program is also encouraging.
However, earnings per share in the second quarter of 2016 are expected to be slightly below adjusted earnings per share of 75 cents in the second quarter of 2015. While the company anticipates strong sales growth and further improvement in gross profit margin, additional brand marketing expenses in the second quarter, along with an increase in the tax rate will likely hurt earnings growth.
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, 2 or 3 for this to happen. 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 74 cents per share.
Zacks Rank: McCormick has a Zacks Rank #3 (Hold), which when combined with an ESP of 0.00% 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.
Stocks to Consider
Stocks in the consumer staples sector that have both a positive earnings ESP and a favorable Zacks Rank are:
Molson Coors Brewing Company (TAP - Free Report) with an Earnings ESP of +0.86% and a Zacks Rank #1 (Strong Buy).
Nu Skin Enterprises, Inc. (NUS - Free Report) with an Earnings ESP of +2.60% and a Zacks Rank #1.
Time, Inc. (TIME - Free Report) with an Earnings ESP of +31.25% and a Zacks Rank #3.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>