MKC
McCormick & Co Inc
Consumer
06/02/2019
Presented
| Date | 05/29/2019 |
| Price | $76.51 |
| Market Cap | $20.20B |
| Ent Value | $22.83B |
| P/E Ratio | 31x |
| Book Value | $12.62 |
| Div Yield | 1.49% |
| Shares O/S | 264.01M |
| Ave Daily Vol | 1,908,568 |
| Short Int | N/A |
Current
| Price | $81.49 |
| Market Cap | $21.87B |
| McCormick & Co., Inc. engages in the manufacture, market 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 Industrial business segments. The Consumer segment operates by selling to retail channels, including grocery, mass merchandise, warehouse clubs, discount and drug stores, and e-commerce through the following brands: McCormick, Lawry's, Zatarain's, Simply Asia, Thai Kitchen, Ducros, Vahine, Schwartz, Club House, Kamis, Kohinoor and DaQiao. The Industrial segment offers products to food manufacturers and foodservice industry both directly and indirectly through distributors. The company was founded by Willoughby M. McCormick in 1889 and is headquartered in Sparks, MD. |
Please note, this stock split on 12/1/2020 at a ratio of 2/1. The presented data has been updated to account for the change, however, the text of the note may refer to data based on the original presented price of $153.01.
Publicly traded companies mentioned here: McCormick & Co Inc/MD (MKC), Reckitt Benckiser Group PLC (RB/ LN), Walmart Inc (WMT)
Highlights
The presenter is short McCormick & Co stock (MKC) due to his belief that it is overvalued as a result of passive/quantitative fund flows. At $153, the stock trades at 29x 2019 Street EPS estimates, and 21.5x this year’s consensus EBITDA forecast. To be fair, he acknowledged that MKC has delivered consistent revenue, margin, and EPS growth over the past few years. However, the stock has retraced the steep losses seen during a rough December ‘18 and following a Q4 ‘18 earnings miss (1/24/19) that sent MKC down to ~$120/share. The setup today is similar to the period leading up to the recent declines, and in the presenter’s opinion, the slightest miss or misstep could lead to another 20% - 25% pullback. With over four (4) turns of leverage due to the $4.2B Reckitt Benckiser food business (“RB Foods”) deal, private label pressure, and numbers likely to be roughly in line with consensus estimates, there should be limited potential for the stock to rise (and optionality for bears if results fall short of expectations).
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