Shares of McCormick & Co., Inc. MKC reached a 52-week high of $78.45 on Apr 6, 2015, following the addition of new flavor products to its portfolio. Shares of McCormick gained about 1.8% in a single day and eventually closed at $78.27 on Monday.
We note that shares of this global leader in flavors and spices has been gaining momentum since the company reported strong first quarter fiscal 2015 results on Mar 24 and announced a new share repurchase program on Mar 25. Its shares have gained about 7.5% since the earnings release.
Growth Drivers
On Apr 6, McCormick launched 21 new products including flavored sea salts, chili peppers and burger sauce mix-ins to its lineup. This will enable consumers to explore bold flavors at home that they may have seen in restaurants, foods trucks and online. The new innovations were targeted at the spring season.
While the burger sauce packets give a bold flavor to the steakhouse burgers and contain enough seasoning to make tastier and juicier patties, McCormick's new sea salt grinders would add freshness and flavor to the dishes. Moreover, McCormick Gourmet's three new chili pepper varieties would offer a wide range of options to spice up the meals at home.
Other new products from McCormick brands include OLD BAY HOT Seasoning, Zatarain's Cajun Chicken Flavored Rice, Zatarain's Creamy Parmesan Rice Mix, and Zatarain's Creamy Cajun Style Pasta.
McCormick regularly enhances its products through innovation in order to remain competitive and tap the rising demand for new flavors, spices and herbs, which are fast replacing demand for sugar, salt and fat. Last December, McCormick had introduced 25 new products including Skillet sauces and gluten-free recipe mixes to satisfy the growing consumer demand for flavor. Gluten-free mixes are becoming very popular among health-conscious consumers. These are made of natural herbs and spices and do not contain any artificial flavors. (Read: McCormick Continues to Focus on Product Innovation).
McCormick recently delivered better-than-expected earnings and revenues in the first quarter of fiscal 2015, despite difficult retail and competitive conditions in many markets. However, it has lowered its earnings guidance for 2015, possibly due to apprehensions of higher material costs. (Read: McCormick Beats Earnings Estimates in Q1 on Higher Sales).
McCormick’s board also authorized a new share repurchase program on Mar 25 to purchase $600 million of its outstanding shares. In 2015, the company expects to complete the current $400 million share repurchase program, which was authorized in Apr 2013. Besides share repurchase, the company also regularly pays dividends. The company has also increased dividends in each of the past 29 years.
Zacks Rank
Currently, McCormick has a Zacks Rank #3 (Hold). Some better-ranked stocks in the consumer staples sector are Monster Beverage Corporation (MNST), Supervalu Inc. (SVU) and Flower Foods, Inc. (FLO). While Monster Beverage sports a Zacks Rank #1 (Strong Buy), Supervalu and Flower Foods hold a Zacks Rank #2 (Buy).
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