McCormick & Co Inc. (MKC): what the price requires

At today's price, McCormick & Co Inc. (MKC) is priced for -0.1% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/MKC

Headline

FieldValue
TickerMKC
CompanyMcCormick & Co Inc.
Current price$53.51/sh
CompositionSpices & seasoning 25% / Recipe mixes 6% / Condiments & sauces 14% / Regional leaders 12% / Flavors 24% / Branded foodservice 9% / Custom condiments 5% / Coatings, bulk spices & herbs 5%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basissegment
Implied growth-0.1%

Solve inputs: computed at a 6.8% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8.5pp.

Reconcile: at the x-ray's 9.3% required return this reads ~18%/yr; the models below use their own rates.

How unusual the bet is: within-range (limited comparison data)

ReferenceValue
cohort percentile (of 69 peers)57
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset1.65x5expensive
Earnings2.23x5expensive
Relative0.98x5justifies
Growth0.75x4justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.2%); the inversion above states its own rate.

Per-Model Detail (n=19)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$132.520.40xyesFCF base $1.1B, growth 10% (input: historical growth), terminal g 4.0%, WACC 7.1%, 6yr projection
DCF Exit MultipleGrowth$74.480.72xyesExit EV/EBITDA: 14.3x / 16.3x / 18.3x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$55.450.97xyesP/E 22x (static sector reference · 2026-04), scenarios: 18.3x / 22.0x / 25.7x (bear / base = reference held flat / bull), EV/EBITDA 14x
Simple DDMGrowth——no—
Two-Stage DDMGrowth$67.980.79xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$30.181.77xyesBV/sh $25.99, ROE (TTM) 10.7%, ke 9.3%
Two-Stage Excess ReturnAsset$32.441.65xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$46.751.14xyesRev $7.4B, growth 10% (input: historical growth; tapered), Terminal P/S: 1.6x / 2.0x / 2.3x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$33.531.60xyesEPS $2.79, growth 1% (input: historical EPS growth), PEG=14.69 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$23.992.23xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.00B × (1−21%) / WACC 7.1% → EPV (no growth)
Residual IncomeAsset$32.871.63xyesBV $25.99 + 5yr PV of (ROE (TTM) 10.7% − Kₑ 9.3%) × BV; BV grows 7.0%/yr
Graham NumberAsset$40.421.32xyes√(22.5 × EPS $2.79 × BVPS $25.99) — Graham's conservative floor
EV/EBITDA RelativeRelative$43.581.23xyesEBITDA $1.17B × sector EV/EBITDA 14.0x
FCF YieldEarnings$23.862.24xyesFCF $1019.9M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$22.022.43xyesSBC-adj FCF $0.97B (FCF $1.02B − SBC $0.05B) capitalized at Kₑ
Ben Graham FormulaEarnings$90.170.59xyesEPS $2.79 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$6.857.81xyesBV $25.99 × (ROIC 1.9% / WACC 7.1%)
P/Sales SectorRelative$54.870.98xyesRevenue $7.39B × sector P/S 2.0x
PEG Fair ValueRelative$104.800.51xyesEPS $2.79 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$30.211.77xyesEPS $2.79 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$4.7b
Net debt / NOPAT (after-tax)5.73x
Net debt / operating income (pre-tax)4.52x
Interest coverage4.9x
Share count CAGR (buyback)-0.1%
Burning cashno

Bullet Takeaways

Bull Case

Consumer staples are usually valued on a simple question: can the company raise prices without losing volume? McCormick's recent results answer it about as cleanly as the category allows. In the second quarter, constant-currency sales rose 14%, gross profit margin expanded 270 basis points on pricing and cost savings, and adjusted EPS of $0.80 beat the $0.70 consensus, all while year-over-year volumes held flat rather than falling. A flavor company that pushes price through and keeps volume is demonstrating exactly the pricing power the staples multiple is supposed to pay for.

The structural advantage is the dual position the 10-K describes. McCormick is a branded leader, and at the same time "a leading supplier of private label items, also known as store brands." That is an unusual hedge. When consumers trade down to store brands in a tight economy, McCormick often makes those store brands too, so the volume migrates within its own factories rather than away from the company. The company also frames "scalable and differentiated innovation" as its primary way to distinguish its brands "from our competition, including private label," spanning "every type of cooking occasion, from gourmet, premium items to convenient and value-priced fla"vors. Spice is a small line item on a grocery bill but a large determinant of how a meal tastes, which is why the category resists price-led switching better than most.

The Flavor Solutions segment is the quieter growth engine. It supplies industrial flavor systems to large food and beverage manufacturers, and organic sales there rose 3% in the quarter, split nearly evenly between price and volume, with the Americas up 4% on demand from large CPG customers, private label, and branded foodservice. This is a business with high switching costs: once a McCormick flavor is engineered into a customer's product, reformulating around it is expensive and risky. The company reaffirmed full-year guidance of 13% to 17% net sales growth and adjusted EPS of $3.05 to $3.13, and it has a long record of raising its dividend. The bull case is the textbook staples case, and the recent prints are filling in the textbook.

Bear Case

The advantage the bull leans on, McCormick supplying both its own brands and the private-label versions, is also where the erosion shows. Being the leading store-brand maker means the company profits from the trade-down, but it profits at private-label economics, which are thinner than branded economics. Every shopper who moves from a yellow-capped McCormick bottle to a cheaper store brand the company also fills is a customer McCormick keeps and a margin McCormick loses. In a stretched-consumer environment, that mix shift is a slow leak on the blended margin, and the branded premium that justifies a staples multiple narrows by exactly the amount the private-label business grows.

Customer concentration sharpens the risk on the Flavor Solutions side. The 10-K is explicit: "two large customers that, in the aggregate, constituted approximately 24% of consolidated sales in 2025," and it warns that "the loss of either of these large customer"s could adversely affect the business. A quarter of sales resting on two relationships is a meaningful dependency. Large CPG customers have their own margin pressures, their own reformulation capabilities, and the negotiating leverage that comes with size; a flavor supplier negotiating with a buyer that large is not the price-setter the consumer-shelf business is.

The financial frame adds the third leg. Net debt of about $4.7 billion sits at roughly four times trailing operating income, with interest coverage near five and a half times. That is investment-grade and serviceable, but it is not a fortress, and it means a chunk of the steady cash flow goes to interest rather than to shareholders. The valuation lenses that capitalize current free cash, rather than projecting growth, read the stock as expensive for this reason: the company is a fine business carrying real leverage and earning a return on equity only modestly above its cost of equity. The bear case is not that McCormick breaks. It is that a margin slowly diluted by private label, a top line dependent on two big buyers, and a balance sheet that is leveraged rather than pristine, together cap the upside on a multiple that already assumes the franchise stays exactly as durable as it looks today.

Valuation

For a multi-segment staple, the cleaner lens is what the price assumes of the segment carrying the premium, and here it is undemanding. The Consumer business inverts to roughly a 4% annual operating DECLINE over five years at today's price, which sits in the lower half of the peer multiple range. The market is not asking McCormick to accelerate; it is pricing in a gentle fade. That is a low bar for a company that just grew constant-currency sales 14% and expanded gross margin, and it frames the whole valuation: the upside is in McCormick simply not declining, while the price already discounts that it will.

The methods agree the stock is reasonable rather than cheap or rich. Peer multiples and the growth-based cash-flow methods land close to the price: a sector earnings multiple near twenty-two times and an exit-multiple cash-flow read both sit in the neighborhood of $46.65 (June 27, 2026). Only the earnings-power lens, which capitalizes a normalized operating profit with no growth credit, says expensive, and that is the expected verdict for any branded compounder whose worth is in its pricing power rather than in this year's static cash flow. The asset-value methods land a little above the price, anchored on a return on equity around 11% against a roughly 9% cost of equity, a modest but positive spread. The pattern is the signature of a quality staple at a fair price: no family screams overvaluation, and none screams bargain.

Solvency is the one place a reader should not wave through the staples reputation. Net debt of about $4.7 billion is roughly four times trailing operating income, with interest coverage near five and a half times, which is comfortable but real leverage. The share count is essentially flat, so the equity is not being diluted, and the company funds a long-standing dividend out of dependable cash flow. The decisive question for the valuation is not solvency, which is sound, but mix: whether McCormick can keep pushing branded price through without ceding so much shelf to its own private-label business that the blended margin slips. At a price that already assumes a slow fade, the business does not need to do anything heroic to clear the bar. It needs to hold the line on margin while the volume stays put.

Catalysts

McCormick's recent prints have leaned positive. Second-quarter 2026 adjusted EPS of $0.80 beat the $0.70 consensus on revenue of $1.93 billion, with constant-currency sales up 14%, gross margin up 270 basis points on pricing, cost savings and a tariff refund, and volumes flat year over year. The first quarter set the same tone, with sales up about 16.7% to $1.87 billion and non-GAAP EPS of $0.66 ahead of consensus. The standout was Flavor Solutions, where organic sales rose 3% with the gains split between price and volume, and the Americas grew 4% on demand from large CPG customers, private label, and branded foodservice.

The company reaffirmed its fiscal 2026 outlook of 13% to 17% net sales growth and adjusted EPS of $3.05 to $3.13, which the market read as confidence in the margin recovery. The forward watch items are the cost and tariff backdrop, since the most recent margin gain was helped by a tariff refund that does not repeat, and the pace of volume in a cautious-consumer environment, where the trade-down between branded and private label decides the blended margin. Management's framing of innovation as the defense against private label is the qualitative thesis to track quarter by quarter.

Peer Cohorts (Per Segment, With Filing Citations)

Consumer (reported)

Flavor Solutions (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

McCormick Q2 2026 earnings, 2026 · McCormick FY2025 10-K

View the full interactive MKC report on boothcheck