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Flavor Solutions Lifts MKC's Q3 Results: Will the Growth Last?
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Key Takeaways
Flavor Solutions sales rose 1% to $752M in Q3, with strong QSR momentum and 6.3% APAC organic growth.
Health and wellness demand is boosting partnerships in protein drinks, snacks, and zero-sugar items.
Adjusted operating income fell 1.8% in Q3, but MKC sees Flavor Solutions driving 2025 margin expansion.
McCormick & Company Inc.’s (MKC - Free Report) third-quarter fiscal 2025 results underscore steady growth in underlying volumes within the Flavor Solutions segment, despite soft industry conditions, aided in part by last year’s timing-related consumer activity in the Americas. Net sales in the Flavor Solutions segment increased 1% year over year to $752 million, with minimal currency impact.
In the Americas, Flavor Solutions’ organic sales rose 0.9% year over year, driven by a 2% contribution from pricing, strong performance with faster-growing flavor customers and continued QSR momentum, partially countered by a modest decrease in CPG volumes. In the Asia-Pacific region, organic sales grew 6.3% year over year, reflecting 9% volume growth fueled by QSR promotions and limited-time offers, somewhat negated by a 3% adverse pricing impact.
Profitability in Flavor Solutions is trending positively on a year-to-date basis, with adjusted operating income up 9.5% (up 12% on a constant currency basis). However, in the third quarter, adjusted operating income declined 1.8% (down 1.6% at cc) as higher commodity costs and elevated tariffs more than offset pricing and SG&A efficiencies. McCormick expects the Flavor Solutions segment to be the primary driver of operating margin expansion in 2025.
The company continues to see strong momentum in health and wellness trends, as high-protein and healthy claims accelerate purchase behavior across retail and foodservice. McCormick is capitalizing on this demand by partnering with both established and emerging brands to deliver Flavor Solutions for energy and hydration products, protein-based beverages and snacks, and zero-sugar drinks. These consumer trends are positioned to support the long-term growth trajectory of the Flavor Solutions segment.
McCormick’s Flavor Solutions segment shows steady volume strength and rising health-focused demand, positioning it well for sustained growth—though the environment continues to remain challenging into 2026, the long-term momentum appears to be firmly intact.
The Zacks Rundown for MKC
MKC’s shares have declined 13.7% year to date compared with the industry’s decline of 18.9%. MKC carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, MKC trades at a forward price-to-earnings ratio of 20.87, higher than the industry’s average of 14.53.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MKC’s fiscal 2025 and 2026 earnings implies a year-over-year rise of 2.4% and 6.5%, respectively.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
United Natural Foods, Inc. (UNFI - Free Report) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural’s current fiscal-year sales and earnings implies growth of 2.5% and 167.6%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.
Lamb Weston Holdings, Inc. (LW - Free Report) engages in the production, distribution and marketing of frozen potato products in the United States, Canada, Mexico and internationally. LW currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Lamb Weston's current fiscal-year sales indicates growth of 1.3% and earnings indicate a decline of 6.3% from the prior-year levels. Lamb Weston delivered a trailing four-quarter earnings surprise of 16%, on average.
Ollie’s Bargain Outlet Holdings, Inc. (OLLI - Free Report) operates as a retailer of closeout merchandise and excess inventory in the United States. OLLI currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Ollie’s Bargains' current fiscal-year sales and earnings indicates a growth of 16.4% and 16.5%, respectively, from the prior-year levels. The company delivered a trailing four-quarter earnings surprise of 16%, on average.
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Flavor Solutions Lifts MKC's Q3 Results: Will the Growth Last?
Key Takeaways
McCormick & Company Inc.’s (MKC - Free Report) third-quarter fiscal 2025 results underscore steady growth in underlying volumes within the Flavor Solutions segment, despite soft industry conditions, aided in part by last year’s timing-related consumer activity in the Americas. Net sales in the Flavor Solutions segment increased 1% year over year to $752 million, with minimal currency impact.
In the Americas, Flavor Solutions’ organic sales rose 0.9% year over year, driven by a 2% contribution from pricing, strong performance with faster-growing flavor customers and continued QSR momentum, partially countered by a modest decrease in CPG volumes. In the Asia-Pacific region, organic sales grew 6.3% year over year, reflecting 9% volume growth fueled by QSR promotions and limited-time offers, somewhat negated by a 3% adverse pricing impact.
Profitability in Flavor Solutions is trending positively on a year-to-date basis, with adjusted operating income up 9.5% (up 12% on a constant currency basis). However, in the third quarter, adjusted operating income declined 1.8% (down 1.6% at cc) as higher commodity costs and elevated tariffs more than offset pricing and SG&A efficiencies. McCormick expects the Flavor Solutions segment to be the primary driver of operating margin expansion in 2025.
The company continues to see strong momentum in health and wellness trends, as high-protein and healthy claims accelerate purchase behavior across retail and foodservice. McCormick is capitalizing on this demand by partnering with both established and emerging brands to deliver Flavor Solutions for energy and hydration products, protein-based beverages and snacks, and zero-sugar drinks. These consumer trends are positioned to support the long-term growth trajectory of the Flavor Solutions segment.
McCormick’s Flavor Solutions segment shows steady volume strength and rising health-focused demand, positioning it well for sustained growth—though the environment continues to remain challenging into 2026, the long-term momentum appears to be firmly intact.
The Zacks Rundown for MKC
MKC’s shares have declined 13.7% year to date compared with the industry’s decline of 18.9%. MKC carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, MKC trades at a forward price-to-earnings ratio of 20.87, higher than the industry’s average of 14.53.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for MKC’s fiscal 2025 and 2026 earnings implies a year-over-year rise of 2.4% and 6.5%, respectively.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
United Natural Foods, Inc. (UNFI - Free Report) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for United Natural’s current fiscal-year sales and earnings implies growth of 2.5% and 167.6%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.
Lamb Weston Holdings, Inc. (LW - Free Report) engages in the production, distribution and marketing of frozen potato products in the United States, Canada, Mexico and internationally. LW currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Lamb Weston's current fiscal-year sales indicates growth of 1.3% and earnings indicate a decline of 6.3% from the prior-year levels. Lamb Weston delivered a trailing four-quarter earnings surprise of 16%, on average.
Ollie’s Bargain Outlet Holdings, Inc. (OLLI - Free Report) operates as a retailer of closeout merchandise and excess inventory in the United States. OLLI currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Ollie’s Bargains' current fiscal-year sales and earnings indicates a growth of 16.4% and 16.5%, respectively, from the prior-year levels. The company delivered a trailing four-quarter earnings surprise of 16%, on average.