McCormick & Company, Incorporated Just Recorded A 15% EPS Beat: Here's What Analysts Are Forecasting Next

Investors in McCormick & Company, Incorporated (NYSE:MKC) had a good week, as its shares rose 3.3% to close at US$70.94 following the release of its quarterly results. Revenues were US$1.6b, approximately in line with expectations, although statutory earnings per share (EPS) performed substantially better. EPS of US$0.68 were also better than expected, beating analyst predictions by 15%. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for McCormick

Taking into account the latest results, McCormick's 15 analysts currently expect revenues in 2024 to be US$6.68b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 2.4% to US$2.82. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$6.68b and earnings per share (EPS) of US$2.84 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$74.82, showing that the business is executing well and in line with expectations. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on McCormick, with the most bullish analyst valuing it at US$93.00 and the most bearish at US$60.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that revenue is expected to reverse, with a forecast 0.2% annualised decline to the end of 2024. That is a notable change from historical growth of 5.3% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 3.0% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - McCormick is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that McCormick's revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for McCormick going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for McCormick you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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