McCormick & Company, Incorporated (MKC) Company Bio
McCormick & Company manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the entire food industry – retail outlets, food manufacturers and foodservice businesses. The company was founded in 1889 and is based in Sparks, Maryland.
MKC Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for MKC, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Mccormick & Co Inc ranked in the 34th percentile in terms of potential gain offered. We should note, though, that all scenearios modelled for this stock suggest it is overvalued. The most interesting components of our discounted cash flow analysis for Mccormick & Co Inc ended up being:
The stock's equity weight, or the proportion of capital from equity relative to debt, is 86. Its equity weight surpasses that of 67.25% of free cash flow generating stocks in the Consumer Defensive sector.
MKC's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 30.07% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Consumer Defensive that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as MKC, try INGR, DAR, YEWB, UVV, and CL.
It's been a long, long time since the packaged foods category, was really thought of as a growth opportunity, but with COVID-19 leading to major changes in consumer behavior, that's what we have ... at least for the moment. Therein lies one of the key issues for McCormick & Company...
Stephen Simpson, CFA on Seeking Alpha | October 1, 2020
McCormick & Company (MKC) reports sales rose 9% in FQ3 on a constant-currency basis with significant consumer segment growth partially offset by a low single digit sales decline in the flavor solutions segment. Adjusted operating income was up 6% during the quarter on a constant-currency basis. Operating income was 19.1%...
"We've gained market share in most of our categories, and this isn't just a U.S. phenomena. This is happening around the world. It's going to drive growth for a long time to come," McCormick CEO Lawrence Kurzius told CNBC.