Q3 Earnings Roundup: McCormick (NYSE:MKC) And The Rest Of The Shelf-Stable Food Segment
Wrapping up Q3 earnings, we look at the numbers and key takeaways for the shelf-stable food stocks, including McCormick (NYSE:MKC) and its peers.
As America industrialized and moved away from an agricultural economy, people faced more demands on their time. Packaged foods emerged as a solution offering convenience to the evolving American family, whether it be canned goods or snacks. Today, Americans seek brands that are high in quality, reliable, and reasonably priced. Furthermore, there's a growing emphasis on health-conscious and sustainable food options. Packaged food stocks are considered resilient investments. People always need to eat, so these companies can enjoy consistent demand as long as they stay on top of changing consumer preferences. The industry spans from multinational corporations to smaller specialized firms and is subject to food safety and labeling regulations.
The 20 shelf-stable food stocks we track reported a mixed Q3. As a group, revenues were in line with analysts’ consensus estimates while next quarter’s revenue guidance was 5.7% below.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.1% since the latest earnings results.
McCormick (NYSE:MKC)
The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE:MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.
McCormick reported revenues of $1.68 billion, flat year on year. This print exceeded analysts’ expectations by 0.8%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ EPS estimates.
Brendan M. Foley, President and CEO, stated, "We are pleased with our year to date performance, which was in line with our expectations and reflects the success of our prioritized investments in the areas within our portfolio that we believe will drive the greatest value. This quarter we reached a meaningful milestone by delivering total global positive volume growth, reflecting improved trends across both segments, and we expect this momentum to continue into the fourth quarter. In our Consumer segment, we delivered solid volume growth, despite a more challenging macro environment in China. In Flavor Solutions, we drove sequential volume improvement, as we delivered strong growth in Branded Foodservice.
McCormick Total Revenue
Unsurprisingly, the stock is down 8.3% since reporting and currently trades at $75.45.
Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE:GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.
General Mills reported revenues of $5.24 billion, up 2% year on year, outperforming analysts’ expectations by 1.9%. The business had a very strong quarter with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ gross margin estimates.
General Mills Total Revenue
Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 3.9% since reporting. It currently trades at $63.37.
Best known for its SuperPretzel soft pretzels and ICEE frozen drinks, J&J Snack Foods (NASDAQ:JJSF) produces a range of snacks and beverages and distributes them primarily to supermarket and food service customers.
J&J Snack Foods reported revenues of $426.8 million, down 3.9% year on year, in line with analysts’ expectations. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and gross margin estimates.
As expected, the stock is down 10.4% since the results and currently trades at $155.30.
Spun out of Post Holdings in 2019, Bellring Brands (NYSE:BRBR) offers protein shakes, nutrition bars, and other products under the PowerBar, Premier Protein, and Dymatize brands.
BellRing Brands reported revenues of $555.8 million, up 17.6% year on year. This number surpassed analysts’ expectations by 2%. Overall, it was a strong quarter as it also recorded full-year revenue guidance exceeding analysts’ expectations and an impressive beat of analysts’ gross margin estimates.
BellRing Brands scored the fastest revenue growth and highest full-year guidance raise among its peers. The stock is up 3% since reporting and currently trades at $75.64.
Founded in 1895, Post (NYSE:POST) is a packaged food company known for its namesake breakfast cereal and healthier-for-you snacks.
Post reported revenues of $2.01 billion, up 3.3% year on year. This result surpassed analysts’ expectations by 2.2%. It was a strong quarter as it also logged a solid beat of analysts’ EPS estimates and a decent beat of analysts’ adjusted operating income estimates.
The stock is up 5.2% since reporting and currently trades at $113.48.
Thanks to the Fed's series of rate hikes in 2022 and 2023, inflation has cooled significantly from its post-pandemic highs, drawing closer to the 2% goal. This disinflation has occurred without severely impacting economic growth, suggesting the success of a soft landing. The stock market has thrived in 2024, spurred by recent rate cuts (0.5% in September and 0.25% each in November and December), and a notable surge followed Donald Trump's presidential election win in November, propelling indices to historic highs. Nonetheless, the outlook for 2025 remains clouded by the pace and magnitude of future rate cuts as well as potential changes in trade policy and corporate taxes once the Trump administration takes over. The path forward is marked by uncertainty.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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