Mccormick & Co Inc (NYSE: MKC)

Sector: Consumer Defensive Industry: Packaged Foods CIK: 0000063754
Market Cap 16.10 Bn
P/B 9.13
P/E 44.21
P/S 3.77
ROIC (Qtr) 8.21
Div Yield % 1.82
Rev 1y % (Qtr) 2.91
Total Debt (Qtr) 4.00 Bn
Debt/Equity (Qtr) 0.70
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About

McCormick & Co Inc, known by its stock symbol MKC, is a prominent player in the flavor industry, specializing in manufacturing, marketing, and distributing spices, seasoning mixes, condiments, and other flavorful products. The company operates in two main segments: consumer and flavor solutions. In the consumer segment, McCormick & Co Inc generates around 57% of its consolidated net sales and 73% of its consolidated operating income. This segment offers a variety of products, including spices and seasonings, condiments, and sauces, under well-known...

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Investment thesis

Bull case

  • Operating cash flow of 962.20M provides strong 20.83x coverage of stock compensation 46.20M, indicating sustainable incentive practices.
  • Robust free cash flow of 740.40M exceeds capital expenditure of 221.80M by 3.34x, indicating strong organic growth funding capability.
  • Tangible assets of 4.61B provide robust 5.05x coverage of other current liabilities 912.30M, indicating strong asset backing.
  • Operating cash flow of 962.20M provides strong 45.60x coverage of operating expenses 21.10M, showing operational efficiency.
  • Retained earnings of 3.82B provide full 1.23x coverage of long-term debt 3.11B, indicating strong internal capital position.

Bear case

  • Operating cash flow of 962.20M barely covers its investment activities of (255.20M), with a coverage ratio of -3.77, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 95.90M against inventory of 1.27B, the 0.08 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 962.20M provides thin coverage of dividend payments of (483M) with a -1.99 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 95.90M provide limited coverage of acquisition spending of (34.10M), which is -2.81x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Free cash flow of 740.40M represents just -2.02x of debt issuance (366.60M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segment Reporting Information, by Segment Breakdown of Revenue (2025)

Segment Reporting Information, by Segment Breakdown of Revenue (2025)

Peer comparison

Companies in the Packaged Foods
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 KHC Kraft Heinz Co 28.20 Bn -4.82 1.13 21.22 Bn
2 GIS General Mills Inc 26.99 Bn 20.72 1.54 13.73 Bn
3 JBS Jbs N.V. 17.81 Bn 10.08 0.23 23.92 Bn
4 MKC Mccormick & Co Inc 16.10 Bn 44.21 3.77 4.00 Bn
5 HRL Hormel Foods Corp /De/ 12.37 Bn 18.03 1.34 2.86 Bn
6 SJM J M SMUCKER Co 11.08 Bn 19.60 1.97 7.91 Bn
7 PPC Pilgrims Pride Corp 10.32 Bn 9.54 0.56 3.29 Bn
8 MICC Magnum Ice Cream Co N.V. 9.71 Bn 28.17 1.04 4.02 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.32 1.47
EV to Cash from Ops. EV/CFO 32.03 29.75
EV to Debt EV to Debt 4.36 27.85
EV to EBIT EV/EBIT 32.50 86.88
EV to EBITDA EV/EBITDA 27.29 -156.20
EV to Free Cash Flow [EV/FCF] EV/FCF 41.49 -5.67
EV to Market Cap EV to Market Cap 1.08 1.15
EV to Revenue EV/Rev 4.09 7.32
Price to Book Value [P/B] P/B 9.13 8.48
Price to Earnings [P/E] P/E 44.21 14.45
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.48 4.58
Dividend Payout Ratio % Div Payout % (Qtr) 61.20 3.76
Dividend per Basic Share Div per Share (Qtr) 1.83 0.65
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 66.33 22.76
Interest Coverage Int. cover (Qtr) 5.65 6.64
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 19.32 -118.07
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -48.47 43.48
Dividend Growth (1y) % Div 1y % (Qtr) 7.02 0.66
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -1.08 -48.16
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 2.60 -152.35
EBIT Growth (1y) % EBIT 1y % (Qtr) 0.14 -50.79
EBT Growth (1y) % EBT 1y % (Qtr) 1.64 -54.94
EPS Growth (1y) % EPS 1y % (Qtr) 0.00 -28.10
FCF Growth (1y) % FCF 1y % (Qtr) 14.44 7.02
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.05 439.70
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.52 1.01
Cash Payout Ratio Cash Payout (Qtr) 0.41 0.12
Cash Ratio Cash Ratio (Qtr) 0.03 0.86
Current Ratio Curr Ratio (Qtr) 0.70 2.60
Debt to Equity Ratio Debt/Equity (Qtr) 0.70 2.21
Interest Cover Ratio Int Coverage (Qtr) 5.65 6.64
Times Interest Earned Times Interest Earned (Qtr) 5.65 6.64
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 19.60 -919.13
EBIT Margin % EBIT Margin % (Qtr) 16.22 -1,474.87
EBT Margin % EBT Margin % (Qtr) 13.35 -1,537.76
Gross Margin % Gross Margin % (Qtr) 37.90 26.98
Net Profit Margin % Net Margin % (Qtr) 10.50 -1,538.60