MKC - McCormick: Dividend Growth And Expenses Reduction Imply Undervaluation

2024-03-29 10:55:06 ET

Summary

• McCormick recently delivered better-than-expected EPS and is expected to see EPS growth in 2024 and 2025.
• The company's pricing strategies and divestiture of low margin business units could lead to an increase in operating profit margin.
• McCormick's comprehensive continuous improvement and efficiency savings programs could accelerate net profit margin growth.

McCormick & Company, Incorporated (MKC) recently delivered better than expected EPS, continues to pay dividends , and reports a 5 year dividend growth rate of 8.35% . Given recent successful pricing strategies and the global operating efficiency savings programs, I believe that we can expect operating profit margin growth and profit margin growth. In addition, further divestitures of low margin business units like the Giotti canning business unit could accelerate gross profit margin growth. There are some risks coming from failed introduction of products or goodwill impairments, however I believe that MKC could trade at higher price marks.

McCormick & Company, Inc

McCormick is a manufacturer, marketer, and distributor of spices, condiments, seasoning mixes, and other flavor-related products for food, with clients from various areas within the food industry, both manufacturers and retail distributors....

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