- Price
- $46.24
- Fair value
- $65.00
- Discount
- 28.9%
- Uncertainty
- Medium
- LSEG rating
- 2.38
- Moat
- Wide
- Next earnings
- 2027-01-21
- Next earnings is estimate
- Yes
- Company name
- McCormick
- Sector
- Packaged foods & flavors
- About
- McCormick makes spices, seasonings, condiments and flavors. It reports two segments. The Consumer segment sells branded products, such as McCormick spices, Frank's and Cholula, to grocery stores and other retailers. The Flavor Solutions segment sells seasonings and flavors to food makers and restaurant chains. On January 2, 2026, McCormick paid $750 million to raise its share of McCormick de Mexico to 75%, and it now consolidates that business. In Q3 2026, net sales were $2.02 billion, of which Consumer gave $1.22 billion and Flavor Solutions $809 million. McCormick makes money from the margin on its products, and it calls itself a dividend aristocrat, a company that has raised its dividend for many years in a row.
- Thesis
- The market discounts McCormick because of its planned combination with Unilever's food business, announced on March 31, 2026. McCormick will pay Unilever $15.7 billion in cash and issue new shares, so its current shareholders will own only about 35% of the combined company. The deal values Unilever Foods at about $44.8 billion, about twice McCormick's own value of about $21 billion, and net leverage will be up to about 4 times EBITDA at closing. The stock fell about 10% in the two trading days after the announcement. The base business also grows slowly: in Q3 2026, organic sales grew 1.9%, and Consumer volume and mix fell 1.1%. For the gap to close, McCormick shareholders must approve the share issuance, the antitrust and other approvals must come, and McCormick must replace the bridge loan with permanent debt at a reasonable cost. After closing, McCormick must deliver the $600 million of net cost synergies within three years and reduce net leverage to about 3 times within two years, as it promised. The merger agreement lets either party end it if the deal has not closed by March 31, 2027, with two possible extensions of six months. The first checks are the shareholder vote and the Q4 2026 report, expected in early 2027. Because the synergies and the debt reduction take two to three years, the gap can close only slowly, and not before 2028.
- Risks
- The Unilever Foods deal is very large. McCormick will pay $15.7 billion in cash and issue shares that leave current shareholders with about 35% of the company. If the integration fails or the $600 million of cost synergies does not come, value per share can fall.
Net leverage will be up to about 4 times EBITDA at closing. Higher interest rates raise the cost of the permanent financing. If cash flow is weaker than planned, debt reduction to about 3 times can take longer, and the credit rating can fall.
The deal needs McCormick shareholder approval, antitrust and foreign investment approvals, and the separation of Unilever Foods from Unilever. A delay or a failed vote costs time and money. McCormick must pay $420 million to Unilever in some cases, or up to $75 million of expenses if its shareholders reject the deal.
Consumers buy carefully, and Consumer segment volume and mix fell 1.1% in Q3 2026. Commodity and freight costs rose, partly because of the conflict in the Middle East.
- Balance sheet
- Cash: $331M
Debt: $5.0B
Net debt: $4.7B
EBITDA, last 12 months: $1.3B
Net debt / EBITDA: 3.6× (medium)
Interest cover: 4.0×
Undrawn credit line: $2.5B
Debt due within 12 months: $2.1B
McCormick funds itself with senior notes, commercial paper and bank lines of the parent company. At August 31, 2026, debt was $2.91 billion of long-term debt, $772 million of current long-term debt and $1.34 billion of short-term borrowings, mostly commercial paper. Debt includes $73 million of finance lease liabilities. Short-term borrowings rose from $381 million at November 30, 2025, mainly to pay $750 million for McCormick de Mexico. EBITDA is GAAP operating income plus depreciation and amortization for the 12 months to August 31, 2026, after special charges for the Unilever Foods deal. Interest cover is operating income divided by interest expense for the first nine months of fiscal 2026. Undrawn credit is a $2.0 billion revolving facility to May 2030 and a $500 million facility to January 2027, which support commercial paper. For the Unilever Foods deal, McCormick has a bridge loan commitment of $13.7 billion and a $2.0 billion term loan that it can draw only at closing. It plans to replace the bridge loan with notes and term loans. It expects net leverage of up to about 4 times at closing and about 3 times within two years.
As of 2026-08-31.
- Checkpoints
- Jan 21, 2027 (estimate): Q4 2026 results and 2027 outlook. Pending. Watch: Organic sales growth in the 2026 outlook range of 1% to 3% and stand-alone net leverage below 2.9 times pass; lower organic growth or higher leverage fails.
Q1 2027 (estimate): Shareholder vote and approvals for the Unilever Foods deal. Pending. Watch: Shareholder approval, antitrust approvals and permanent financing at a reasonable cost pass; a failed vote, a block or a long delay fails.
Mar 31, 2027: Merger agreement end date. Pending. Watch: Closing by this date, or a short extension with all approvals in place, passes; a long delay or an end to the agreement fails.
- Recent events
- 2026-10-01: McCormick reported Q3 2026 results. Net sales grew 17.4% to $2.02 billion, mostly from McCormick de Mexico, and organic sales grew 1.9%. Adjusted EPS was $0.86, against $0.85 a year earlier. Special charges, mostly costs of the Unilever Foods deal and a $43 million impairment, lowered EPS by $0.50. McCormick kept its 2026 adjusted EPS outlook of $3.05 to $3.13. The stock fell 4.9% that day.
2026-09-24: McCormick's audit committee dismissed Ernst & Young as auditor, effective after the 2026 annual report, because EY is not expected to be independent after the Unilever Foods deal closes.
2026-09-09: At a Barclays conference, McCormick kept its target of $600 million of net cost synergies from the Unilever Foods deal, with two thirds by the second year after closing. The CFO said that McCormick is on track for net leverage below 2.9 times on a stand-alone basis by the end of 2026.
2026-08-25: Board member Anne Bramman said that she will resign on November 30, 2026, after she became CFO of Best Buy. Valarie Sheppard became Chair of the Audit Committee on September 1, 2026.
2026-06-25: McCormick reported Q2 2026 results. Net sales grew 16.7%, and organic sales grew 1.7%. Adjusted EPS was $0.80, up from $0.69. McCormick kept its 2026 outlook.
2026-04-28: McCormick signed a $2.0 billion three-year term loan for the closing of the Unilever Foods deal and cut the bridge loan commitment by the same amount, to $13.7 billion.
2026-04-15: McCormick named Andrew Foust, President Americas, as Chief Integration Officer for the Unilever Foods deal. Patrick Davis became Interim President Americas.