Temporary Challenges Give Way to Tasty Market Position and Dividend Boost
- McCormick(NYE: MKC) is working to overcome temporary growth and earnings challenges.
- Despite a decline in stock value in 2022, the company is in a strong market position.
- Expectations for a return to normal profit levels in 2023 due to aggressive price increases, cost cuts and easing supply chain pressures.
- The stock is currently being offered at an attractive valuation, at about 3.5 times annual sales.
Spice giant, McCormick (NYE: MKC), is working to overcome temporary growth and earnings challenges. Despite a modest outperformance in the wider market in 2022, the packaged foods specialist’s stock ended the year with a double-digit percentage drop in value. This decline has given investors an attractive valuation for the company.
McCormick(NYE: MKC), who specializes in spice, sauce and flavorings, is in a strong market position. While sales trends may appear weaker than recent years, the company is expecting to return to its more normal profit level in 2023. This is due to a combination of aggressive price increases, cost cuts and easing supply chain pressures, which should help annual earnings growth to reach a double-digit rate.
The company also announced a boost to its dividend in late 2022, increasing the quarterly payout to $0.39 per share from $0.37 per share in 2023. This marks the 37th consecutive annual increase in McCormick’s dividend, providing a yield of roughly 1.8%.
Investors are encouraged to watch for signs of improvement in McCormick’s late January quarterly announcement. However, those who appreciate the business can buy the stock now for about 3.5 times annual sales, compared to nearly 5 times sales in late 2020.
McCormick is a global leader in the production and marketing of spices, herbs, seasonings, and flavorings. The company was founded in 1889 and is based in Sparks, Maryland, United States. McCormick is a publicly traded company and its stock is listed on the New York Stock Exchange under the ticker symbol “MKC.” The company operates in over 120 countries, and it is recognized as one of the leading companies in the spice industry.