Update: Hold McCormick On Rosy Outlook

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About: McCormick & Company, Inc. (MKC)
by: Winning Strategies
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Summary

McCormick announced strong financial results.

The company's growth strategies are working in a competitive environment.

It is a good stock to hold for safe returns.

McCormick & Company (NYSE:MKC) announced fourth-quarter and full-year results. The company's growth strategies are working in a competitive business environment. In fiscal 2014, it had generated revenue growth of 3% to $4.24B compared to $4.12B in the past year. In addition to the revenue-generating strategies, its cost cutting and margin expansion strategies are also working. The company had posted 8% growth in its earnings compared to the past year. Moreover, its cash-generating potential is also enhancing with the growth in its earnings. In the past full year, it had generated operating cash flow of $503 million compared to $465 million in 2013. Its operating cash flow had provided a complete cover to its capital requirements of $132 million and dividend payments of $192 million in 2014.

In my recent article, I recommended defensive investors to buy this stock for safe returns. Since then, its share price surged from $65/share to $75/share at present. In addition, the company had increased its quarterly dividend by 8.1% in the fourth quarter. The company has been working on smart business strategies which are allowing it to sustain its returns. At present, McCormick is working on a smart strategy, which includes category growth initiatives, enhancing and expanding distribution channels, and escalating market share with acquisitions and innovations. In addition, McCormick is supporting margins with its Comprehensive Continuous Improvement [CCI] program.

Moving on, McCormick is looking to keep its momentum with its growth strategies. The company is expecting to generate mid-single-digit growth in sales and high-single-digit growth in earnings. Its focus on expanding its geographic footprints, innovations and enhancing customer intimacy will allow it to generate sustainable growth. In 2015, McCormick has a strong line-up of innovation, including re-launch of its entire gourmet line in the U.S., flavored sea salt grinders and new Vahine brand dessert items in France. With its CCI initiatives, McCormick is looking to save almost $85 million this year. I am not seeing any potential risk to its business model and financial performance which can hamper its growth strategies. Therefore, I recommend defensive investors to hold this stock for steady returns.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.