Value
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.2 |
| P/S | 9.0 |
| EV/EBITDA | 3.7 |
| Fwd P/E | 7.5 |
| PEG | 4.4 |
| Analyst target | 4.0 |
- ▸Forward P/E: 16.5x
- ▸PEG: 2.06
MKC · Why this verdict
Why McCormick & Company, Incorporat (MKC) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
Show full disclosure ▾Hide full disclosure ▴
About TrendMatrix. TrendMatrix is a publisher of general securities research and market commentary. We publish on a regular schedule. All content is the same for every subscriber in a tier — we do not provide personalized investment advice and we do not take into account any individual subscriber's financial situation, investment objectives, risk tolerance, tax situation, or holdings.
Not investment advice. TrendMatrix is not a registered investment adviser. Our content is for informational and educational purposes only. Consult your own licensed investment adviser, broker, or tax professional before making any investment decision.
Conflicts and positions. The TrendMatrix editorial team frequently holds personal long-term positions in securities discussed. We disclose positions held at the time of publication on each piece. We maintain a trading-window policy: we do not initiate or close positions in the same direction as a TrendMatrix publication within 24 hours before or 72 hours after publication.
No paid promotion. TrendMatrix does not accept payment from any issuer, broker, or third party in exchange for coverage of any security. Our sole compensation is subscription revenue.
No fiduciary duty. No fiduciary, advisory, or agency relationship is created between you and TrendMatrix by reading our content or subscribing to our service.
Performance. Past performance is not indicative of future results. Performance figures reflect the published model only and do not reflect any individual subscriber's actual results.
VerdictHOLD
Overall score5.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
McCormick is a wide-moat consumer franchise with best-in-class margins and three beats in the last four quarters trading below its 200-day moving average — with earnings nine days away, the technical downtrend may prove transient if the company delivers again, but a persistent free cash flow quality gap warrants ongoing monitoring.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company holds a wide economic moat, generates a return on equity of 25%, and posts margins that rank among the best in its peer group — characteristics of a franchise that has compounded returns through multiple market cycles and is likely to maintain its competitive position. Quality breakdown | Return on equity stays above 20% and operating margin stays above 18% for the next four consecutive quarters. | →Stable |
| CounterA forward earnings multiple that is expanding as earnings normalize means the cost of owning the business is rising faster than reported profits; if revenue growth continues to soften, multiple expansion could reverse abruptly and compress the stock. | ||
The consensus analyst target implies approximately 11% upside from the current price at a forward earnings multiple near 14 times — an undemanding valuation for a wide-moat consumer staples business that provides a margin of safety for investors entering at current levels. Bull case | Stock price closes above $53.27 within the next four quarters, capturing the upside implied by the current valuation discount. | →Stable |
| CounterA forward multiple that is expanding as earnings normalize means the current multiple understates the true cost of ownership if earnings growth decelerates; the apparent margin of safety may not be as wide as it appears if forward estimates are revised lower. | ||
Free cash flow amounts to only 23% of net income, a significant divergence flagged as a quality concern that raises questions about whether strong reported earnings are translating into cash available for dividends, debt reduction, 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 |
| CounterA mature consumer staples business with strong earnings consistency often trades at a premium despite moderate cash conversion; if the gap reflects transient working-capital dynamics, the quality concern may prove temporary. | ||
The company has beaten consensus EPS estimates in three of the last four quarters with an average positive surprise of approximately 5%, and an earnings report due in nine days provides a near-term catalyst that could arrest the current technical downtrend. Earnings | The company beats consensus EPS estimates by more than 3% in the upcoming quarter, extending the overall beat pattern. | →Stable |
| CounterReading the earnings history chronologically — two beats, then a miss, then the most recent beat — the pattern is not a clean streak; a second consecutive miss in the upcoming report could accelerate selling from investors who bought in anticipation of a recovery. | ||
The stock is trading below its 200-day moving average, which is itself declining at approximately 5% per month — a confirmed downtrend that represents a meaningful near-term headwind even for a high-quality franchise. Bear case | The stock closes above its 200-day moving average for 10 consecutive trading sessions and the moving average slope turns positive, signaling the downtrend has been broken. | ↓Deteriorating |
| CounterThe MACD is improving and the RSI is supportive near 56, suggesting the worst of the selling pressure may already be priced in; a strong earnings result could reverse the trend quickly in a lower-volatility defensive name. | ||
The company holds a wide economic moat, generates a return on equity of 25%, and posts margins that rank among the best in its peer group — characteristics of a franchise that has compounded returns through multiple market cycles and is likely to maintain its competitive position.
→StableQuality breakdown
- Expectation
- Return on equity stays above 20% and operating margin stays above 18% for the next four consecutive quarters.
CounterA forward earnings multiple that is expanding as earnings normalize means the cost of owning the business is rising faster than reported profits; if revenue growth continues to soften, multiple expansion could reverse abruptly and compress the stock.
The consensus analyst target implies approximately 11% upside from the current price at a forward earnings multiple near 14 times — an undemanding valuation for a wide-moat consumer staples business that provides a margin of safety for investors entering at current levels.
→StableBull case
- Expectation
- Stock price closes above $53.27 within the next four quarters, capturing the upside implied by the current valuation discount.
CounterA forward multiple that is expanding as earnings normalize means the current multiple understates the true cost of ownership if earnings growth decelerates; the apparent margin of safety may not be as wide as it appears if forward estimates are revised lower.
Free cash flow amounts to only 23% of net income, a significant divergence flagged as a quality concern that raises questions about whether strong reported earnings are translating into cash available for dividends, debt reduction, 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.
CounterA mature consumer staples business with strong earnings consistency often trades at a premium despite moderate cash conversion; if the gap reflects transient working-capital dynamics, the quality concern may prove temporary.
The company has beaten consensus EPS estimates in three of the last four quarters with an average positive surprise of approximately 5%, and an earnings report due in nine days provides a near-term catalyst that could arrest the current technical downtrend.
→StableEarnings
- Expectation
- The company beats consensus EPS estimates by more than 3% in the upcoming quarter, extending the overall beat pattern.
CounterReading the earnings history chronologically — two beats, then a miss, then the most recent beat — the pattern is not a clean streak; a second consecutive miss in the upcoming report could accelerate selling from investors who bought in anticipation of a recovery.
The stock is trading below its 200-day moving average, which is itself declining at approximately 5% per month — a confirmed downtrend that represents a meaningful near-term headwind even for a high-quality franchise.
↓DeterioratingBear case
- Expectation
- The stock closes above its 200-day moving average for 10 consecutive trading sessions and the moving average slope turns positive, signaling the downtrend has been broken.
CounterThe MACD is improving and the RSI is supportive near 56, suggesting the worst of the selling pressure may already be priced in; a strong earnings result could reverse the trend quickly in a lower-volatility defensive name.
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
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 2.4 |
| MACD | 9.6 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 1.2 |
- ▸Overbought bear rally (RSI 79)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -3.2%/30d — confirmed downtrend
Sentiment
6.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.2 |
| Price target | 6.6 |
| erm sentiment | 5.0 |
Insider
7.2/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Share-count fallback (no $ value): net +0 shares
- ▸Institutions accumulating
Peer rank
6.8/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.7 |
| quality rank | 9.4 |
| growth rank | 8.0 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
1.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.6 |
| 52w position | 5.2 |
Risk (lower is worse)
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| volatility | 5.4 |
| put call | 4.2 |
| implied vol | 2.9 |
| max pain risk | 7.0 |
| beta | 9.2 |
| debt equity | 7.1 |
- ▸High IV: 62%
Catalyst
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 6.0 |
| dividend safety | 7.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 3.6%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (6)
- MOMENTUM:5.8>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:53d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.4=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=5.8>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.36
Upside
-3.1%
Downside
8.7%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 79
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.8>=5.5. Top dim: Insider at 7.2; weakest: Technical at 1.9. No conviction either direction.
The strongest dimensions are Insider at 7.2, Peer rank at 6.8, and Sentiment at 6.4; the weakest are Technical at 1.9, Growth at 3.4, and Momentum at 5.8. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -0.36 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 Superior Margins
Trip ifOperating margin compresses below 15% for 2 consecutive quarters.
- P2Earnings Beat Streak Upcoming Catalyst
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P3Fcf Conversion Quality Gap
Trip ifFree cash flow as a percentage of net income rises above 50% for 2 consecutive quarters.
- P4Confirmed Downtrend Technical Risk
Trip ifStock closes above its 200-day moving average for 10 consecutive trading sessions.
- P5Valuation Margin Of Safety
Trip ifConsensus analyst price target falls below $50.00.