McCormick & Company, Inc.
) is set to report fiscal fourth-quarter 2012 results before the
opening bell on Jan 24. Last quarter, this global leader in
flavors posted a 2.63% positive surprise. Let's see how things
are shaping up prior to the announcement.
Growth Factors this Past Quarter
McCormick's cost saving initiatives, brand building
investments and its growing presence in both the developed as
well as the emerging markets have been the driving factors for
The deals of 2011 (acquisitions of the U.S.-based Kitchen
Basics, Inc. and Poland-based Kamis S.A and the joint venture
with India-based Kohinoor Foods Ltd.) contributed significantly
to sales growth in all the three quarters of fiscal 2012. In
addition, the company anticipates expanding in China with the
acquisition of Wuhan Asia-Pacific Condiments Co., Ltd. by
mid-2013. Further, McCormick's cost saving initiative, namely
Comprehensive Continuous Improvement ('CCI') program, has
remained very effective to fight the rising input costs and also
allow increased brand buildings investments.
Growth Prospects in Fourth Quarter
For the upcoming quarter, McCormick will roll out new products
like Hispanic rice mixes, frozen Simply Asia entrées and a
holiday multi-pack of small-size Extracts to improve its
portfolio of spices. Further, we believe that the cost saving
initiatives and the upcoming acquisition in China will remain
Despite the sluggish U.S. economy, currency headwinds and
rising input costs, the company remains impressed with its strong
brand portfolio, geographic acquisitions and ccost saving
Other Stock to Consider
For a specialty food company worth considering, our model
suggests that a stock needs to have both a positive Earnings
Expected Surprise Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank of #1, 2 or 3.
Flowers Foods Inc.
), Earnings ESP of +4.00% and Zacks Rank #1 (Strong Buy)
ESP stands for Expected Surprise Prediction, which represents
the difference between the Most Accurate estimate and the Zacks
McCormick carries a Zacks Rank #3 (Hold). Other specialty food
B&g Foods Inc
), which are better positioned than McCormick and carry a Zacks
Rank #1. Peers like
Campbell Soup Co.
) hold a Zacks Rank #2 (Buy).
B&G FOODS CL-A (BGS): Free Stock Analysis
CAMPBELL SOUP (CPB): Free Stock Analysis
FLOWERS FOODS (FLO): Free Stock Analysis
INGREDION INC (INGR): Free Stock Analysis
MCCORMICK & CO (MKC): Free Stock Analysis
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