MKC
McCormick & Company, Incorporated$65.27
Sell
Target $54.65
Report: Mar 07, 2026Consumer Defensive • Packaged Foods • Mature CompounderSnapshot
Decision-first overview with recommendation, valuation anchor, and current setup.
Company Overview
Research Snapshot
Price History
Pelican View
Current$65.27-16.3%
Rec: SellConviction: High
Entry Target
N/A
N/A
Fair Value
$54.65
(16% below current)
Stop Loss
N/A
N/A
Position Size
None
Time Horizon
N/A
Key Metrics
Live Snapshot
Market Data
52 Week High$83.15
52 Week Low$48.31
Avg. 3 Month Volume4.07M
Efficiency
LTM Gross Margin37.9%
LTM EBITDA Margin31.3%
LTM EBIT Margin27.9%
LTM Operating Margin15.1%
LTM ROA11.3%
LTM ROE26.4%
LTM ROIC34.1%
LTM ROCE18.7%
Capital Structure
Market Cap (MM)$13.6B
Enterprise Value (MM)$18.3B
Shares Outstanding268.80M
Total Debt (MM)$4.92B
Cash & Equivalents (MM)$177.70M
LTM Net Debt (MM)$4.75B
LTM Net Debt/EBITDA2.1x
Growth
TTM Rev. Growth5.7%
Last 3-Yr Rev. CAGR3.6%
Last 3-Yr EBITDA CAGR24.3%
Last 3-Yr EPS CAGR35.1%
Valuation
Street Target Price$73.57
LTM EV/Revenue2.6x
LTM EV/Gross Profit6.8x
LTM EV/EBIT9.2x
LTM EV/EBITDA8.2x
LTM P/E8.5x
LTM EV/FCF26.9x
LTM P/FCF19.9x
LTM P/TB2.7x
LTM P/B1.9x
Dividend Yield3.6%
Payout Ratio30.0%
Executive SummarySituation: Current price is $65.27 versus fair value $54.65 (-16.3% expected return), and valuation confidence is stable. Debate: Bull case depends on Continued Gross Margin Contraction: If Q1 2026 results show gross margins below 37.9%, it will invalidate management's 'surgical pricing' narrative and trigger a multiple de-rating. Bear case centers on Moat Erosion from Private Label: Low-cost competitors are permanently impairing McCormick's pricing power in the Consumer segment, leading to the bear case of margin compression. Conclusion: Recommendation is Sell with no position, pending a materially better risk/reward setup.
Bull Case
Steady dividend growth with a 40-year track record and $740.4M in FCF; successful integration of McCormick de Mexico providing international volume tailwinds; CCI program delivering $100M in annual cost savings.
Bear Case
Structural margin compression from $140M annualized tariffs and commodity inflation; eroding switching-cost moat due to private-label competition; heavy insider selling of $22.9M signaling lack of leadership conviction.
Key Catalysts
Near-Term (0-6 months)Impact: High
Continued Gross Margin Contraction: If Q1 2026 results show gross margins below 37.9%, it will invalidate management's 'surgical pricing' na...
Mid-Term (6-18 months)Impact: Critical
Volume Stagnation in Consumer Segment: A drop in organic volume growth below 1% would signal that price elasticities are higher than managem...
Long-Term (18+ months)Impact: Moderate
McCormick is relevant for analysis now because the recent board refresh and the $22.9M in insider sales suggest a pivot point in leadership'...
Primary Risks
Concern: High
Moat Erosion from Private Label: Low-cost competitors are permanently impairing McCormick's pricing power in the Consumer segment, leading t...
Concern: Medium
Tariff Escalation: The $140M annualized tariff exposure on China-sourced ingredients could increase, leading to a permanent impairment of th...
Concern: Medium
The stewardship verdict is 'Adequate' but deteriorating. While the board refresh adds high-quality CPG leaders like Richard Dierker, the com...
Recent Activity
2026-01-22SEC Filing (8-K)
-8.05%McCormick & Company appoints Gavin Hattersley and Rick Dierker to its Board of Directors effective February 1, 2026
2025-06-26SEC Filing (8-K)
+5.34%McCormick reports strong second quarter 2025 performance and reaffirms fiscal 2025 outlook
2024-03-26SEC Filing (8-K)
+10.52%McCormick reports strong first quarter 2024 performance and reaffirms fiscal 2024 outlook
2023-10-03SEC Filing (8-K)
-8.46%McCormick reports strong third quarter 2023 results and increases full-year adjusted EPS outlook
2023-06-29SEC Filing (8-K)
-5.52%McCormick promotes Brendan Foley to President and Chief Executive Officer effective September 1, 2023
Valuation Table
9.8/10Decision Grade
Scenario Range
$43
Bear
$55
Base
$68
Bull
$65