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McCormick Grows on Product Launches, Cautious on Recalls

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McCormick & Co. Inc. (MKC - Free Report) has been witnessing rising demand for spices, herbs and seasonings over the last few years. Further, the company has been regularly launching products in order to remain competitive. The stock has a long-term earnings growth rate of 9%. However, recently the company had to recall a number of McCormick Original Taco Seasoning Mix bottles, due to unlabeled milk allergen, which hurt customers’ confidence.

On Oct 6, McCormick voluntarily recalled a number of 24 oz. Club Size McCormick Original Taco Seasoning Mix, UPC 52100302461 with best by date codes between Jun 27, 2018 and Sep 16, 2018 due to an unlabeled milk allergen. It should be noted that other sizes of this seasoning mixes were not affected.

The affected bottles were incorrectly filled with Original Taco Seasoning containing whey, which can cause hives, stomach upset, vomiting and even anaphylaxis, in extreme cases in those allergic to milk.

McCormick has received one report of an allergic reaction so far due to consumption of this product. As a result, it has warned customers and grocery outlets to remove the product immediately.

MCCORMICK & CO Price and Consensus


MCCORMICK & CO Price and Consensus | MCCORMICK & CO Quote

Last month, the company delivered better-than-expected third-quarter fiscal 2016 results, wherein both earnings and revenues beat the Zacks Consensus Estimate. The company has also raised its financial guidance for fiscal 2016.

Adjusted earnings of $1.03 per share increased 21.1% year over year, owing to favorable tax rate and higher operating income. Further, the favorable impact of higher sales and cost savings was offset by an increase in brand marketing and material costs, and currency headwinds. Revenues also grew about 3% from the prior-year quarter, driven by acquisitions (Stubbs and Gourmet Garden), which added 2% to the sales increase. Product innovation, brand marketing support and expanded distribution, as well as pricing actions also led to sales growth, offsetting the negative impact of material costs and currency.

The company has raised its earnings and sales growth outlook for 2016 based on current projections for the fourth quarter.

Other Picks

Other well-positioned consumer staples companies include Omega Protein Corp. , US Foods Holding Corp. (USFD - Free Report) and Ingredion, Inc. (INGR - Free Report) .

Omega Protein has an average positive earnings surprise of 24.01% in the trailing four quarters with a long-term earnings growth rate of 8.00%.

US Foods has a long-term earnings growth rate of 18.59%.

Ingredion has an average positive earnings surprise of 9.63% in the trailing four quarters with a long-term earnings growth rate of 11.00%.

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