McCormick Issues a Bland Outlook for 2020



Want to kick things off with some earning stories and let's begin with McCormick the spice maker and really Dang good stock over the last few years but not so much today share slipping a bit after McCormick reported lower than expected earnings. What is going on here? Well not only the McCormick mess on their revenue and earnings but they gave week guidance for twenty twenty Net income is actually down a penny year year on flat revenue. So Oh I think all in all this I mean McCormick's never been a high flying stock but it was a worse quarter than what was expected. But you need to put it in context for instance McCormick prior prior to this earnings was up forty percent over the past year alone and that is twenty five percent but still. That's you know. Twenty percent went over the market. Fifteen twenty percent over the market which is extremely impressive for a company that has only grown revenue in the low single digits for a long time. Now that's a lot of old. Hey it's a lot of old bay and it might not be a high flying company in constant currency terms. The company actually grew sales three percent. So there were some headwinds and there that we're a little bit out of their control. I think all in all McCormack ultimately what you're seeing is a strong stable dividend paying company that has just been on a tear and needs a little a little bit of a pullback if he asked me and speaking of being on a tear I think a lot of us when we think McCormack we think spices but in recent years they've gone on a bit of a buying spree where they've bought food companies and food brands like Franks red. Hot French is when I think mustard. I think French's so it's not just a spice maker anymore. Yeah look I have a bottle of fringe. Red Hot in my fridge constantly. I put that stuff on everything. The stick with their tagline there so McCormick is smart because they're always looking forward thinking. Okay well if we see any softness in this spice market last year there are some softens on the Food Service side of their their spiced division. So yeah they when they see opportunities is to acquire different brands. Then they do that. And it's smart because it diversified revenue stream a little bit infringe. Red Hot is great. Do you have a favorite spice. I like McCormack's six pre mixed spices. I know that's a cop out like I own little paper and the little paper bags I I know I know when I go home. I already have all those spices in my cabinet event somewhere. But there's something so nice. I just a little bag. You know putting it on the chicken putting on whatever and baking and making it all enough. I think there's no crime in that. I think you should just own it. You know what I love and I'm such a late adopter that I feel like I've I came across this maybe ten fifteen years ago but I'm such a huge fan of sea salt and I know salt. I know the world is the difference. It's I don't know it just feels chunkier and it just feels it feels better now. I know I know the tide. The tide has been turning against salt for a while and I know that like too much salt not a great thing so hold your emails but love me some sea salt so back to the stock. The stock doc has more than doubled over the last five years. Are you still bullish on McCormick. Going forward I am their cash flow from operations up fifteen percent year over year and May November they authorized their thirty fourth consecutive quarter of dividend increases. I think today's reaction might be a little bit of a needed. Pullback for the stock itself but in terms of it as an investment especially if you're looking for a dividend dividend about one point five percent yield but it's a good stable player that generates a lot a lot of cash

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