McCormick & Company (NYSE: MKC): Low Valuation and Transformative Growth Plans
- McCormick & Company (NYSE: MKC) has increased its dividend for 40 consecutive years.
- The stock trades at approximately 16 times projected 2026 adjusted earnings and offers a dividend yield near 3.9%.
- Second-quarter adjusted operating income increased 30.1%, while the proposed Unilever Foods combination could significantly expand the business.
McCormick & Company (NYSE: MKC) is a global flavor company with brands including McCormick, French's, Frank's RedHot, Cholula, and Old Bay. The company has paid dividends since 1925 and increased them annually for 40 years. Its annual dividend of $1.92 per share provides a yield of approximately 3.9%.
McCormick expects fiscal 2026 adjusted EPS of $3.05 to $3.13, placing its forward adjusted earnings multiple near 16x at a share price of approximately $49.30.
Second-quarter sales increased 16.7% to $1.94 billion, while adjusted operating income rose 30.1% to $336.4 million. Adjusted EPS increased from $0.69 to $0.80, although currency movements and a $28 million tariff refund supported the results. Organic sales grew a more moderate 1.7%.
McCormick also plans to combine with Unilever's foods business, creating a company with approximately $20 billion in annual sales. Unilever and its shareholders would own 65% of the combined company, while existing McCormick shareholders would retain 35%.
The transaction could generate approximately $600 million in annual cost savings, but it also introduces considerable regulatory, integration, and debt risks. Britain's Competition and Markets Authority is reviewing the deal, with an initial decision expected by November 11, 2026.
McCormick's valuation, dividend history, and improving profitability may appeal to long-term investors. However, regulatory approval, integration progress, organic growth, and debt reduction remain important factors to monitor.
