Stock of the Day

February 5, 2021

McCormick & Company, Incorporated (MKC)

$80.15
+$0.94 (+1.2%)
Market Cap: $21.24B

About McCormick & Company, Incorporated

McCormick & Co., Inc. engages in the manufacturing, marketing, and distribution of spices, seasoning mixes, condiments, and other flavorful products to retail outlets, food manufacturers, and foodservice businesses. It operates through the Consumer and Flavor Solutions segments. The Consumer segment sells spices, seasonings, condiments, and sauces. The Flavor Solutions segment includes seasoning blends, spices and herbs, condiments, coating systems, and compound flavors. The company was founded by Willoughby M. McCormick in 1889 and is headquartered in Baltimore, MD.

McCormick & Company, Incorporated Bull Case

Here are some ways that investors could benefit from investing in McCormick & Company, Incorporated:

  • McCormick & Company, Incorporated has a strong return on equity of 14.89%, indicating effective management and profitability in generating returns for shareholders.
  • The company recently increased its quarterly dividend from $0.42 to $0.45 per share, reflecting a commitment to returning value to shareholders. This translates to an annualized dividend of $1.80, providing a yield of 2.34%.
  • Analysts have set a consensus price target of $83.75 for McCormick & Company, Incorporated, suggesting potential upside from the current stock price of $78.17.
  • Institutional investors have shown confidence in McCormick & Company, Incorporated, with significant increases in holdings, such as Robeco Institutional Asset Management B.V. boosting its stake by 321.2% recently.
  • The company maintains a healthy net margin of 11.73%, indicating strong profitability relative to its revenue, which can be attractive for investors looking for stable earnings.

McCormick & Company, Incorporated Bear Case

Investors should be bearish about investing in McCormick & Company, Incorporated for these reasons:

  • Despite the recent dividend increase, the company's dividend payout ratio stands at 61.43%, which may raise concerns about sustainability if earnings do not grow as expected.
  • Some analysts have issued a "hold" rating on the stock, indicating uncertainty about its short-term performance, which could deter risk-averse investors.
  • Barclays recently cut its target price for McCormick & Company, Incorporated from $85.00 to $82.00, suggesting a more cautious outlook on the stock's potential growth.
  • With 79.74% of the stock owned by institutional investors, there may be less room for retail investors to influence the stock's performance, which could limit individual investor engagement.
  • Recent insider selling, such as a director selling 5,000 shares, may raise red flags for potential investors regarding the confidence of those within the company.

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