Value
5.6/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 9.2 |
| P/S | 9.0 |
| EV/EBITDA | 3.8 |
| PEG | 4.5 |
- ▸PEG: 1.99
MKC-V · Why this verdict
Why McCormick & Company, Incorporat (MKC-V) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock is trading below its 200-day moving average, which is declining at approximately 5% per month — a confirmed downtrend that signals the market has not yet established a floor for this share class. Bear case | The stock closes above its 200-day moving average for 10 consecutive trading sessions and the moving average slope turns flat or positive, signaling a trend reversal. | →Stable |
| CounterThe MACD is improving and the momentum score has recovered to a level consistent with a recovering trend; if the business reports stronger-than-expected results, the technical setup could resolve upward quickly. | ||
Free cash flow amounts to only 23% of net income — a divergence flagged as a quality concern — raising questions about whether strong reported earnings are translating into cash the business can deploy for shareholder returns or reinvestment. Quality breakdown | Free cash flow as a percentage of net income rises above 50% for two consecutive quarters, demonstrating meaningful improvement in cash conversion. | →Stable |
| CounterThis divergence has not historically prevented the business from sustaining capital returns or maintaining financial health, and may reflect structural working-capital or capital expenditure patterns rather than impaired earnings quality. | ||
The company holds a wide economic moat, generates a return on equity of 25%, and posts margins that are best-in-class within its peer group — attributes of a business that has compounded returns through multiple cycles and is likely to retain its competitive advantages. Quality breakdown | Return on equity stays above 20% and gross margin stays above 20% for the next four consecutive quarters, confirming the franchise's structural quality has not deteriorated. | →Stable |
| CounterA wide moat priced into a downtrending stock offers limited near-term protection; if consumer spending weakens or lower-cost alternatives gain shelf space, even a durable competitive position cannot prevent multiple compression. | ||
The stock offers approximately 2% upside to its near-term technical target, and the risk/reward ratio is unfavorable at roughly 0.35-to-1 — meaning the measured downside is nearly three times the available upside at current levels, making new positions unattractive on a risk-adjusted basis. Price targets | Stock price falls below $44.00, creating upside to the take-profit level of more than 10% and restoring a more favorable risk/reward ratio for new entry. | →Stable |
| CounterExisting holders of a wide-moat franchise in a confirmed downtrend may prefer to hold through the weakness and collect the dividend rather than exit at an unfavorable risk/reward — the thesis for continuance differs from the thesis for new entry. | ||
The stock is trading below its 200-day moving average, which is declining at approximately 5% per month — a confirmed downtrend that signals the market has not yet established a floor for this share class.
→StableBear case
- Expectation
- The stock closes above its 200-day moving average for 10 consecutive trading sessions and the moving average slope turns flat or positive, signaling a trend reversal.
CounterThe MACD is improving and the momentum score has recovered to a level consistent with a recovering trend; if the business reports stronger-than-expected results, the technical setup could resolve upward quickly.
Free cash flow amounts to only 23% of net income — a divergence flagged as a quality concern — raising questions about whether strong reported earnings are translating into cash the business can deploy for shareholder returns or reinvestment.
→StableQuality breakdown
- Expectation
- Free cash flow as a percentage of net income rises above 50% for two consecutive quarters, demonstrating meaningful improvement in cash conversion.
CounterThis divergence has not historically prevented the business from sustaining capital returns or maintaining financial health, and may reflect structural working-capital or capital expenditure patterns rather than impaired earnings quality.
The company holds a wide economic moat, generates a return on equity of 25%, and posts margins that are best-in-class within its peer group — attributes of a business that has compounded returns through multiple cycles and is likely to retain its competitive advantages.
→StableQuality breakdown
- Expectation
- Return on equity stays above 20% and gross margin stays above 20% for the next four consecutive quarters, confirming the franchise's structural quality has not deteriorated.
CounterA wide moat priced into a downtrending stock offers limited near-term protection; if consumer spending weakens or lower-cost alternatives gain shelf space, even a durable competitive position cannot prevent multiple compression.
The stock offers approximately 2% upside to its near-term technical target, and the risk/reward ratio is unfavorable at roughly 0.35-to-1 — meaning the measured downside is nearly three times the available upside at current levels, making new positions unattractive on a risk-adjusted basis.
→StablePrice targets
- Expectation
- Stock price falls below $44.00, creating upside to the take-profit level of more than 10% and restoring a more favorable risk/reward ratio for new entry.
CounterExisting holders of a wide-moat franchise in a confirmed downtrend may prefer to hold through the weakness and collect the dividend rather than exit at an unfavorable risk/reward — the thesis for continuance differs from the thesis for new entry.
TrendMatrix Research · core thesis
Engine thesis — one sentence
The bundle shows a wide economic moat, 25% return on equity, and best-in-class peer margins — durable quality indicators — but the stock is in a confirmed downtrend declining at roughly 5% per month and offers only 2% upside to its near-term target with unfavorable risk/reward, making the current setup more suitable for existing holders than new entrants.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 8.2 |
| ROA | 3.4 |
| Gross margin | 3.8 |
| Op margin | 7.0 |
| Net margin | 10.0 |
| Current ratio | 3.1 |
| FCF quality | 3.5 |
| Moat | 7.5 |
| Piotroski F | 6.7 |
- ▸Strong margins: 22%
- ▸Earnings quality RED FLAG: 44% FCF/NI
- ▸Wide economic moat
- ▸Compounder quality: strong returns + growth
Growth
3.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.7 |
| EPS growth | 0.0 |
Momentum
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -4.8%/30d — confirmed downtrend
Sentiment
5.0/10data confidence 33%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
Insider
5.0/10data confidence 50%Peer rank
5.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.9 |
| quality rank | 9.2 |
| growth rank | 8.1 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
2.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.5 |
| 52w position | 4.2 |
| gap | 5.0 |
Risk (lower is worse)
8.2/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 10.0 |
| days to cover | 10.0 |
| volatility | 4.6 |
| beta | 9.2 |
| debt equity | 7.1 |
Catalyst
7.0/10data confidence 25%| Component | Sub-score |
|---|---|
| dividend safety | 7.0 |
- ▸Dividend: 360.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- MOMENTUM:5.9>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (3)
- ASYMMETRY:UPSIDE_EXHAUSTED (upside=0.0%)
- DEATH_CROSS:momentum=5.9>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
0.00
Upside
+0.0%
Downside
14.6%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 65
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.3 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 8.2) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 0.00 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 8.2, Catalyst at 7.0, and Quality at 5.9; the weakest are Technical at 2.4, Growth at 3.4, and Insider at 5.0. The V9 engine cleared all gates with 3 warnings, producing an asymmetric reward-to-risk of 0.00 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat Quality Franchise
Trip ifReturn on equity falls below 15% for 2 consecutive quarters.
- P2Confirmed Downtrend Headwind
Trip ifStock closes above its 200-day moving average for 10 consecutive trading sessions.
- P3Fcf Conversion Quality Gap
Trip ifFree cash flow as a percentage of net income rises above 50% for 2 consecutive quarters.
- P4Minimal Upside Unfavorable Geometry
Trip ifStock price falls below $44.00, creating upside to the near-term target of more than 10%.