McCormick Shares Slide as It Chalks Up Modest Q4 Sales and Eroding Profits; Shares Not a Bargain
Despite the low-double-digit retraction in McCormick’s shares following a fair end to fiscal 2018 (with 2% organic sales growth in the fourth quarter, a 30-basis-point erosion in adjusted gross margins to 45.5%, and 70 basis points of degradation in adjusted operating margins to 19.9%), we continue to view the stock as overheated. As evidenced by the significant appreciation in shares (which popped from less than $100 to start calendar 2018 to a peak of $155 in mid-December), we think the market...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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