October 24, 2024
Top 10 Stock McCormick Hold Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: McCormick – Top 10 Stock in S&P 500 Consumer Staples Index
McCormick is listed as a top 10 stock on October 24, 2024 in the market index S&P US Consumer because of its high performance in at least one of the Obermatt investment strategies. Only one consolidated Obermatt Rank is above-average. The company enjoys a positive professional investor sentiment, but all financial facts speak against a stock purchase. This is probably an investment into the future. Based on the Obermatt 360° View of 39 (39% performer), Obermatt assesses an overall hold recommendation for McCormick on October 24, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Packaged Foods & Meats |
| Index | Employee Focus US, S&P US Consumer, S&P US Food & Beverage, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View McCormick Hold
| 360 METRICS | October 24, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 25 |
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| GROWTH | ||||||||
| GROWTH | 49 |
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| SAFETY | ||||||||
| SAFETY | 20 |
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| SENTIMENT | ||||||||
| SENTIMENT | 99 |
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| 360° VIEW | ||||||||
| 360° VIEW | 39 |
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ANALYSIS: With an Obermatt 360° View of 39 (better than 39% compared with alternatives), overall professional sentiment and financial characteristics for the stock McCormick are below the industry average. The 360° View is based on consolidating four consolidated indicators, with three out of four indicators below average for McCormick. The consolidated Sentiment Rank has a good rank of 99, which means that professional investors are more optimistic about the stock than for 99% of alternative investment opportunities. But all other ranks are below average. The consolidated Value Rank has a rank of 25, which means that the share price of McCormick is on the higher side compared with typical size in indicators such as revenues, profits, and invested capital. The consolidated Growth Rank also has a low rank of 49, meaning that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. This means that growth is lower than for 49% of competitors in the same industry. Finally, the consolidated Safety Rank has a riskier rank of 20 which means that the company has a riskier financing structure than 80% comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 39, McCormick is worse than 61% of all alternative stock investment opportunities based on the Obermatt Method. As only the professional market sentiment (Sentiment Rank of 99) is above-average, and all other consolidated Obermatt Ranks are below peers, the stock investing proposition case is rather weak. The stock price is expensive for a company of this size in this industry, visible in the below-average Value Rank. Growth is below the competition based on the Growth Rank, and the company has more debt than other companies, according to the Safety Rank. So the question becomes: How important is the Sentiment Rank when all others are below average? When it comes to growth, the low rating might be justified if growth is expected in the future and not yet reflected in current performance. This is often the case for companies with intellectual property, such as technology and pharmaceutical companies. In the early phases, these companies are expensive compared with their size and may have a lot of debt on their books, as is the case here, as seen in the low Value and Safety Ranks. Future growth may be the strongest investment rationale in this case, which is only reflected by institutional investors' opinions. You pay more than the market average for this stock and invest in a rather debt-loaded enterprise, but it may be worth it if the future of McCormicḳ is bright. A small investment might be justified, but proceed with caution. ...read more
Sentiment Strategy: Professional Market Sentiment for McCormick very positive
ANALYSIS: With an Obermatt Sentiment Rank of 99 (better than 99% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock McCormick is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for McCormick. Analyst Opinions are at a rank of 34 (worse than 66% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 100, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in McCormick. Even better, the Professional Investors rank is 96, meaning that professional investors hold more stock in this company than in 96% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 98, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 98% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 99 (more positive than 99% compared with investment alternatives), McCormick has a reputation among professional investors that is significantly higher than that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: McCormick Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 25 (worse than 75% compared with alternatives), McCormick shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with three out of four indicators below average for McCormick. Only the metric dividend yield has an above-average rank, reflecting that dividend practices are expected to be higher than 52% of comparable companies, making the stock an attractive buy for dividend investors. However, dividend investors may get disappointed because all other critical financial indicators are below the market median: Price-to-Sales is 17 which means that the stock price compared with what market professionals expect for future profits is higher than 83% of comparable companies, indicating a low value concerning McCormick's sales levels. The same is valid for Price-to-Profit (also referred to as price-earnings, P/E) with a rank of 22 which means that the stock price compared with what market professionals expect for future profit levels is higher than 78% of comparable companies. In addition, Price-to-Book (also referred to as market-to-book ratio) with a Price-to-Book Rank of 32 is also low. Compared with invested capital, the stock price is higher than for 68% of comparable investments. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 25, is a hold recommendation based on McCormick's stock price compared with the company's operational size and dividend yields. Should dividend investors pick McCormick? The company-reported financials speak against it. The company is expensive compared with revenue and invested capital levels, two reliable company size indicators. In addition, it currently has a low level of profits. How can future dividends be paid in the case that profits remain low? Dividend investors should choose McCormick only if they reasonably expect the low current profit levels to be transitory. ...read more
Growth Strategy: McCormick Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 49 (better than 49% compared with alternatives), McCormick shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for McCormick. Profit Growth has a rank of 59, which means that currently professionals expect the company to grow its profits more than 59% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 79 (above 79% of alternative investments). But Sales Growth has a below the median rank of 38, which means that, currently, professionals expect the company to grow less than 62% of its competitors, and Capital Growth also has a lower rank of 24. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 49, is a hold recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for McCormick. ...read more
Safety Strategy: McCormick Debt Financing Safety risky
| SAFETY METRICS | October 24, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 38 |
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| REFINANCING | ||||||||
| REFINANCING | 17 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 44 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 20 |
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ANALYSIS: With an Obermatt Safety Rank of 20 (better than 20% compared with alternatives), the company McCormick has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of McCormick is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with all three metrics below average for McCormick. Liquidity is at 44, meaning that the company generates less profit to service its debt than 56% of its competitors. This indicates that the company is on the riskier side when it comes to debt service. Even worse, Leverage is at a rank of 38, meaning the company has an above-average debt-to-equity ratio. It has more debt than 62% of its competitors. Finally, Refinancing is at a rank of 17 which means that the portion of the debt about to be refinanced is above average. It has more debt in the refinancing stage than 83% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 20 (worse than 80% compared with alternatives), McCormick has a financing structure that is significantly riskier than that of its competitors. This combination is rather dangerous in most situations. Only very promising companies with bright future outlooks and stellar reputations can operate with such risky financing.
Combined financial peformance: McCormick Lowest Financial Performance
| COMBINED PERFORMANCE | October 24, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 25 |
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| GROWTH | ||||||||
| GROWTH | 49 |
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| SAFETY | ||||||||
| SAFETY | 44 |
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| COMBINED | ||||||||
| COMBINED | 8 |
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ANALYSIS: With an Obermatt Combined Rank of 8 (worse than 92% compared with investment alternatives), McCormick (Packaged Foods & Meats, USA) shares have lower financial characteristics compared with similar stocks. Shares of McCormick are low in value (priced high) with a consolidated Value Rank of 25 (worse than 75% of alternatives), show below-average growth (Growth Rank of 49), and are riskily financed (Safety Rank of 20), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 8, is a sell recommendation based on McCormick's financial characteristics. As the company McCormick's key financial metrics all exhibit below-average performance, such as low value (Obermatt Value Rank of 25), low growth (Obermatt Growth Rank of 49), and risky financing practices (Obermatt Safety Rank of 20), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. Such poor financial performance sometimes indicates that the company's business is all concentrated in some distant future. This is sometimes the case for high-tech or biotechnology companies. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and risky today. In such cases, the Obermatt Method has limited value as it is based on facts we can observe today. If the facts are all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that should only amount to a small fraction of a safe portfolio. ...read more
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