Summary
- McCormick & Company boasts a wide economic moat, strong brand equity, and a century-long dividend streak, having made it a reliable income stream for long-term shareholders.
- Despite recent underperformance, McCormick’s predictable business model and strong market share in spices, seasonings, and condiments offer safe cash flows across economic cycles.
- Recent low correlation to the S&P 500 on broad market dips shows the potential for MKC to amplify risk-adjusted returns for tech-heavy portfolios.
- Despite weak volume growth numbers, the company’s financials show potential for steady growth, with an improving balance sheet featuring reduced debt and growing dividends.
- Rated as a “Moderate Buy,” McCormick stock is recommended for conservative investors seeking stability and income, with potential for better entry points in the near future. McCormick & Company (NYSE:MKC) is a company that I’ve been watching for a long time, but always been hesitant to pull the trigger on. However, lately, I have been becoming more bullish on the stock as I have watched it smooth out volatility in the broader market over the last year. With a wide economic moat supported by strong brand equity, McCormick has outperformed the S&P 500 over the last 30 years. Despite underperformance in recent years, the company’s strong dividend track record, accretive acquisitions, and leadership in several product categories makes it an interesting company to watch. While valuation appears high at first glance, there are signs of modest relative value, especially for long-term, dividend-focused investors optimizing for quality and durability.
Company Overview
McCormick & Company is arguably the largest global player in flavor products, including spices, seasonings, and condiments. In 1889, Willoughby McCormick (what a name!) started creating root beer, flavoring extracts and syrups in a small cellar that he sold door to door. 7 years later he entered into the spice industry by purchasing the F.G. Emmett Spice Company and the rest is history. Today, the company has a market cap of roughly $20 Billion and owns several well-known brands, such as McCormick-branded spices, Cattlemen’s, Cholula, Frank’s RedHot, French’s, Old Bay, Simply Asia, Thai Kitchen, Stubb’s Bar-B-Q, and Zatarain’s, which helped the company generate roughly $6.6 Billion in sales over the last year.
