It has been about a month since the last earnings report for McCormick (MKC). Shares have added about 4.5% in that time frame, underperforming the S&P 500.
But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is McCormick due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent drivers for McCormick & Company, Incorporated before we dive into how investors and analysts have reacted as of late.
McCormick Q1 Earnings Beat Estimates, Sales Up 16.7% Y/Y
McCormick & Company reported first-quarter fiscal 2026 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased year over year.
Adjusted earnings rose 10% to 66 cents per share from 60 cents in the year-ago quarter. The metric beats the Zacks Consensus Estimate of 61 cents per share. The increase was driven by elevated adjusted operating income.
The global flavor leader generated net sales of $1,873.9 million, up 16.7% year over year, including a 3.1% positive currency impact. The top line beats the consensus mark of $1,786 million. The January 2026 acquisition of McCormick de Mexico contributed 13% to the overall sales growth. Organic sales edged up 1.2%, primarily driven by pricing actions.
MKC’s Quarterly Performance: Key Metrics & Insights
The adjusted gross margin expanded 100 basis points, driven by contributions from the McCormick de Mexico acquisition, pricing actions and cost savings from the company’s Comprehensive Continuous Improvement (“CCI”) program, partly offset by higher commodity costs.
Adjusted operating income increased to $268 million from $225 million, reflecting a 19% year-over-year rise, including a 3% favorable currency impact. On a constant currency basis, adjusted operating income grew 16%, supported by elevated gross profit and CCI-driven cost savings, including SG&A efficiencies. These gains were partially offset by higher SG&A expenses, primarily due to acquisition-related costs, continued brand marketing investments and increased technology spending.
Decoding MKC’s Segmental Performance
Consumer: The segment’s sales surged 25% year over year to $1,145 million, supported by a 20% contribution from McCormick de Mexico and a 3% positive currency impact. Organic sales in the segment increased 2%, led by pricing. Adjusted operating income rose 22% year over year to $180 million or 20% in constant currency, driven by higher gross profit, partially offset by increased SG&A investments in marketing and technology.
Flavor Solutions: Sales grew 6% year over year to $729 million, including a 3% favorable currency impact and a 2% contribution from McCormick de Mexico. Organic sales in the segment edged up 1%, driven by pricing. Adjusted operating income increased 12% to $88 million or 7% in constant currency, supported by higher gross profit but partly offset by elevated SG&A expenses, including continued investments in technology.
MKC’s Financial Health Snapshot
McCormick ended the quarter with cash and cash equivalents of $177.7 million, long-term debt of $3.60 billion and total shareholders’ equity of $7.56 billion.
In the three months ended Feb. 28, 2026, net cash provided by operating activities was $50.9 million. The company continues to expect robust cash generation for fiscal 2026, supported by profit and working capital initiatives, and aims to return a significant portion to its shareholders via dividends.
What to Expect From MKC in Fiscal 2026?
The company still expects net sales growth of 13-17% (while 12-16% in constant currency) in fiscal 2026, including an 11-13% contribution from the McCormick de Mexico acquisition in both reported and constant currency terms. Organic sales are projected to increase 1-3% on a constant currency basis.
Adjusted gross margin is expected to expand, implying recovery from 2025, with favorable impacts from organic sales growth, accretion from McCormick de Mexico and benefits from the company’s CCI program, partially offset by higher commodity costs. SG&A expenses are expected to be impacted by cost headwinds, including digital transformation initiatives, the build back of incentive compensation and continued growth investments. These impacts are expected to be partially offset by benefits from the company’s CCI program, including SG&A streamlining initiatives.
Adjusted operating income is projected to rise 16-20% (up 15-19% at constant currency).
The company expects adjusted EPS between $3.05 and $3.13, indicating 2-5% year-over-year growth or a 1-4% rise at constant currency.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, McCormick has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, the stock was allocated a score of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, McCormick has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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McCormick & Company, Incorporated (MKC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).