Company Overview - McCormick & Company, Incorporated is a global leader in flavor, producing and distributing spices, seasonings, and condiments with a market cap of $17 billion, operating in over 150 countries through its Consumer and Flavor Solutions segments [1] Stock Performance - McCormick's stock touched a two-year high of $86.24 on March 10 and is currently trading 25.4% below that peak [2] - MKC stock prices have declined 6.2% over the past three months, underperforming the First Trust Nasdaq Food & Beverage ETF's (FTXG) 2.8% dip during the same period [2] - On a year-to-date basis, MKC stock prices have dropped 15.7% and 21.5% over the past 52 weeks, compared to FTXG's 7% dip in 2025 and 11.9% decline over the past year [3] Financial Performance - McCormick reported Q3 results on October 7, showing a 1.8% growth in organic revenues and an overall topline growth of 2.7% year-over-year to $1.7 billion, surpassing consensus estimates by 60 basis points [4] - The company's adjusted EPS increased by 2.4% year-over-year to $0.85, exceeding consensus estimates by 4.8% [5] Market Position - Despite the stock price decline following the Q3 results, MKC stock maintained positive momentum for three subsequent trading sessions [5] - McCormick has outperformed its peer Hormel Foods Corporation, which experienced a 24.3% drop on a year-to-date basis and a 29.2% plunge over the past year [5] Analyst Ratings - Among the 13 analysts covering MKC stock, the consensus rating is a "Moderate Buy," with a mean price target of $80.21, suggesting a 24.7% upside potential from current price levels [6]

Hi, I'm David Herrell, editor of the Morning Star dividend investor newsletter. In this monthly series, we take a look at the dividend prospects of three stocks that are popular with income investors. Omnicom was the second largest traditional advertising holding company.And following its just completed acquisition of the Interpublic Group, it is now the world's largest marketing company. While Omnicom had kept its dividend rate unchanged since its first payout of 2021, it just announced a 14% increase for ...

Core Viewpoint - The discussion centers around the military's recent actions against drug smuggling and naroterrorism in the Caribbean, highlighting the controversy surrounding the legality and ethics of these operations, particularly a second strike that resulted in additional casualties [3][4]. Group 1: Military Operations - The military campaign has reportedly sunk over 20 boats linked to drug smuggling and naroterrorism, with around 80 individuals killed in these operations [3][4]. - There is significant criticism from lawmakers regarding the legality of a second strike that targeted survivors on a drug boat, raising questions about international maritime law [4]. Group 2: Political Reactions - Some lawmakers, including Senator Mark Warner, have called for the resignation of military officials, questioning their approach to military reform and operational goals [2][3]. - Congressman McCormack defends the military's actions, arguing that they are necessary to combat drug cartels designated as terrorist organizations, which have caused significant casualties in the U.S. [5][6]. Group 3: Casualty Statistics - The drug war in America has resulted in over a million deaths, surpassing casualties from any other war in U.S. history, emphasizing the severity of the issue [5].

Core Insights - McCormick & Company, Inc. (MKC) has shown solid consumer momentum, primarily driven by volume-led growth, with organic sales in the consumer segment increasing by 3% [1][9] - The company achieved share gains in key markets, particularly in the U.S., Canada, and Europe, with notable performance in the grilling portfolio and mustard category [2][3][9] Sales Performance - In Q3 of fiscal 2025, McCormick experienced robust volume growth across its Spices and Seasonings portfolio in every region, with U.S. volumes surpassing private label for the fifth consecutive quarter [2] - The mustard category and hot sauce showed strong results, with unit and dollar share gains across the Americas and EMEA, supported by expanded distribution and enhanced marketing [3][9] Market Trends - McCormick is benefiting from health and wellness trends, with high-protein and better-for-you claims driving accelerated purchase behavior in retail and foodservice channels [5] - The company outperformed industry trends in nutrition bars, beverages, and better-for-you snack seasonings, with strong QSR performance fueled by innovation and new product promotions [4][5] Financial Outlook - The Zacks Consensus Estimate for MKC's fiscal 2025 and 2026 earnings implies a year-over-year rise of 2.4% and 6.5%, respectively [15] - MKC's shares have lost 9.5% in the past six months, aligning with industry performance, and the company trades at a forward price-to-earnings ratio of 21.96, higher than the industry average of 14.87 [6][7]

Core Insights - McCormick & Company Inc. (MKC) reported steady growth in its Flavor Solutions segment for Q3 fiscal 2025, with net sales increasing 1% year over year to $752 million, despite challenging industry conditions [1][9] Segment Performance - In the Americas, organic sales for Flavor Solutions rose 0.9% year over year, driven by a 2% contribution from pricing and strong performance with faster-growing flavor customers, although there was a modest decrease in CPG volumes [2] - The Asia-Pacific region saw organic sales grow 6.3% year over year, with 9% volume growth supported by QSR promotions, partially offset by a 3% adverse pricing impact [2] Profitability Trends - Year-to-date profitability in Flavor Solutions is positive, with adjusted operating income up 9.5% (12% on a constant currency basis), but in Q3, it declined 1.8% due to higher commodity costs and tariffs [3] - McCormick anticipates that the Flavor Solutions segment will be the main driver of operating margin expansion in 2025 [3] Market Trends - The company is experiencing strong momentum in health and wellness trends, with increased demand for high-protein and healthy products, leading to partnerships for energy and hydration products, protein-based beverages, and zero-sugar drinks [4] - These consumer trends are expected to support the long-term growth trajectory of the Flavor Solutions segment [4][5] Stock Performance - MKC's shares have declined 13.7% year to date, compared to the industry's decline of 18.9%, and currently holds a Zacks Rank of 3 (Hold) [8] Valuation Metrics - MKC trades at a forward price-to-earnings ratio of 20.87, which is higher than the industry average of 14.53 [10] Earnings Estimates - The Zacks Consensus Estimate for MKC's fiscal 2025 and 2026 earnings implies a year-over-year rise of 2.4% and 6.5%, respectively [11]

Core Viewpoint - The S&P 500 Index experienced a notable decline, primarily driven by a few large tech stocks, highlighting the volatility of the market and the tendency for rapid declines compared to rises [1]. Group 1: Market Performance - On a recent trading day, approximately one-fourth of the S&P 500 Index stocks were positive, with 32 stocks rising by at least 1%, indicating potential opportunities despite overall market weakness [2]. - Many S&P 500 stocks have struggled to maintain rallies, typically seeing only 5%-7% increases before faltering [4]. Group 2: Stock Analysis - McCormick (MKC), a leading spice manufacturer, is highlighted as a stable investment despite a trailing earnings multiple of 22x and a history of losses over the past three years, suggesting that stability is valued in the current market [4]. - Edison International (EIX), a California-based electric utility, is identified as a speculative comeback candidate, trading at 10x earnings and recovering from significant fire damage in its operational area [5].

Core Insights - McCormick & Company has increased its quarterly dividend by 3 cents, or 6.7%, to 48 cents per share, marking its 102nd year of continuous dividend payments and the 40th consecutive year of quarterly dividend hikes [1][7]. Financial Performance - In the first nine months of fiscal 2025, McCormick returned $362.2 million to shareholders through dividends, with net cash from operating activities totaling $420.2 million [2]. - The company is focused on cash allocation towards growth investments, shareholder dividends, and debt reduction while maintaining a strong investment-grade rating [2]. Market Position and Growth - McCormick operates from a position of category strength, driven by volume-led growth and resilient demand for flavor across global markets [3]. - The company has achieved its fifth consecutive quarter of volume-led growth in Q3 of fiscal 2025, supported by strong performance in the Consumer segment across the Americas and EMEA [4]. Challenges and Strategies - McCormick is navigating a complex cost environment due to higher commodity prices and tariffs, which pressure margins [5]. - The company is leveraging its Comprehensive Continuous Improvement program, targeted pricing actions, and alternative sourcing strategies to offset these challenges while balancing growth investments with disciplined cost control [5]. Strategic Outlook - The latest dividend increase reflects McCormick's commitment to dependable shareholder returns and its strategy of volume-led growth [9]. - Despite challenges from rising commodity costs and tariffs, McCormick's efficiency programs and resilient cash generation reinforce management's confidence in sustaining growth [9].

Core Insights - The article discusses potential stock picks related to Thanksgiving dinner, highlighting how rising food prices may signal investment opportunities in certain companies [2][3]. Company Summaries - **Seaboard Corporation (SEB)**: Known for its Butterball turkey brand, SEB has seen its stock rise over 65% this year. Despite a high nominal price exceeding $4,000, it trades at just 9x earnings, indicating value compared to competitors [4][5][6]. - **Campbell's Company (CPB)**: CPB is recognized for its role in Thanksgiving side dishes, particularly with its Cream of Mushroom soup. The stock is down 26% in 2025 but shows signs of a potential bullish reversal, with a price target of $34.59 suggesting nearly 12% upside [7][9]. - **General Mills (GIS)**: As a key player in baking products, GIS has experienced a year-to-date decline of approximately 25%. Analysts project a price target of $55.82, indicating an 18% upside potential, with the stock trading at 10x earnings [10][11]. - **McCormick & Company (MKC)**: Historically strong in the current quarter, MKC's stock is attractively valued at 21x earnings. Analysts have set a price target of $78.22, reflecting a potential 21% upside, alongside a stable dividend yield of 2.79% [12][13]. - **Constellation Brands (STZ)**: This company, known for its wine and beer products, has seen its stock decline over 40% this year. Analysts project a price target of $186.44, suggesting over 43% upside, with a low valuation of 9.6x forward earnings [14][15].

Core Insights - McCormick & Company Inc. (MKC) achieved volume-led growth for the fifth consecutive quarter in Q3 2025, reporting a 2% organic sales growth primarily driven by increased volumes in the Consumer segment [1][8]. Group 1: Sales Performance - The company's strong performance was notably supported by mustard and hot sauce, which enhanced dollar unit share, alongside a robust Flavor Solutions business that diversified its customer base [2]. - McCormick anticipates organic sales growth in the range of 1-3% for 2025, focusing on efficiency, alternative sourcing, and disciplined revenue management to mitigate future risks [4][8]. Group 2: Operational Challenges - Despite the growth, McCormick faces pressures from the global trade landscape and macroeconomic challenges, including rising commodity prices and tariffs, prompting the company to implement efficiency strategies [3]. - The effective execution of these strategies led to an improvement in operating profit in Q3 2025, even as gross margins faced some strain [3]. Group 3: Competitive Landscape - In the first quarter of fiscal 2026, Conagra Brands Inc. reported a 5.8% drop in net sales, while Kraft Heinz Company experienced a 2.3% decline in net sales to $6.24 billion, indicating competitive pressures in the industry [5][6]. Group 4: Market Position and Valuation - MKC's shares have decreased by 15.3% year-to-date, compared to a 14% decline in the industry, and it currently holds a Zacks Rank 3 (Hold) [7]. - The company trades at a forward price-to-earnings ratio of 20.05, which is higher than the industry average of 14.59 [9]. Group 5: Earnings Estimates - The Zacks Consensus Estimate for MKC's fiscal 2025 and 2026 earnings suggests a year-over-year increase of 2.4% and 6.9%, respectively [11].

Summary of Key Points from the Conference Call Industry Overview - The focus on AI investments has overshadowed other potential investment opportunities in various sectors, including semiconductors, power plants, and capital goods [1][2] - Companies not directly benefiting from AI are highlighted as compelling investment options, such as Freeport-McMoRan, which has indirect exposure to AI [1] Core Insights and Arguments - A screening of Buy-rated US stocks not included in AI/power/infrastructure ETFs identified 82 stocks with positive 3-month EPS revisions and trading below a market multiple of 26x, leading to a final list of 16 equities [2] - Savita Subramanian models an 8% return for the S&P over the next 12 months, emphasizing the importance of owning average stocks rather than the index [3] - Risks associated with AI investments include potential declines in middle-income white-collar jobs, which could impair consumer spending [3] - Hyperscalers investing heavily in AI technology may face de-rating if monetization does not meet expectations, as they currently trade at high multiples despite capital-intensive spending [3] Notable Companies and Their Performance - **Amcor PLC (AMCR)**: Recent acquisition of Berry Global is expected to enhance valuation, with EBITDA projected to approach $3.8 billion for F26 [11][12] - **AT&T Inc. (T)**: Strong performance metrics with 405k post-paid phone net additions, projecting a 9% EPS growth in 2026 [15][17] - **BGC Group**: Dominates the energy derivatives market, with expected growth in volumes due to increased power consumption driven by cloud and AI adoption [18][19] - **Church & Dwight (CHD)**: Positioned to benefit from consumer trade-down trends, with organic sales growth of 3.4% in Q3 [20][21] - **Dollar General (DG)**: Improved execution and a focus on lower price points are expected to boost sales, with a current valuation below the 5-year average [23][27] - **Freeport-McMoRan (FCX)**: Anticipates a restart of the Grasberg mine, with bullish forecasts for copper prices due to supply challenges [32][34] - **Henry Schein (HSIC)**: Transitioning to a higher-margin business model, with a target of 60% operating income from high-growth products by 2027 [38][39] - **Progressive Corp (PGR)**: Strong EPS revisions and expected dividend announcements are anticipated to drive growth [65][67] - **Walt Disney Co. (DIS)**: Growth drivers intact with expectations for double-digit growth in Entertainment operating income [80] Additional Important Insights - The market is currently cautious, providing room for multiple expansions as fundamentals improve across various sectors [14] - Regulatory improvements in Connecticut are expected to enhance Eversource's valuation [28][30] - Viking Holdings is positioned for premium valuation due to its unique brand and superior margins in the cruise industry [76][79] - The overall sentiment indicates a potential for significant investment opportunities outside the AI sector, as companies adapt to changing market dynamics and consumer behaviors [1][2][3]