McCormick Puts Up Bland 1Q, but Wide Moat Intact; Shares Still a Bit Rich
Despite a leading competitive edge, McCormick’s first-quarter results (0.9% underlying top-line growth, 30 basis points of adjusted gross margin expansion to 39.6%, and a 50-basis-point increase in adjusted operating margins to 13.2%) highlight that the firm isn’t immune to adverse competitive pressure and slowing macroeconomic growth around the world. From a segment perspective, industrial sales (around 40% of sales, up 3%) offset a modest--and uncharacteristic--retreat in its consumer business...McCormick & Co. manufactures, markets and distributes spices, seasoning mixes, condiments and other flavor products to the food industry- retailers, food manufacturers and foodservice businesses. The company also is partner in a number of joint ventures that are involved in the manufacture and sale of flavor products. The company's business segments comprised of: consumer, in which the company markets its products to customers and supplies private label items, known as store brands; and flavor solutions, which provides a range of flavor solutions including seasoning blends, spices and herbs, condiments, coating systems and compound flavors.
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