McCormick’s third quarter results came in above Wall Street’s revenue and non-GAAP profit expectations, yet the market reacted negatively due to rising cost pressures. Management attributed the quarter’s top-line growth to continued volume gains in its consumer segment, supported by investments in brand marketing and new product innovation. CEO Brendan Foley highlighted, “Our consumer business continues to drive differentiated performance, really driven by volume,” but noted deceleration in overall food unit growth as a broader industry trend. Gross margin was affected by accelerating commodity costs and newly implemented tariffs, with CFO Marcos Gabriel stating these factors were responsible for about two-thirds of the quarter’s margin compression.
Is now the time to buy MKC? Find out in our full research report (it’s free for active Edge members).
McCormick (MKC) Q3 CY2025 Highlights:
- Revenue: $1.72 billion vs analyst estimates of $1.71 billion (2.7% year-on-year growth, 1.1% beat)
- Adjusted EPS: $0.85 vs analyst estimates of $0.82 (4.2% beat)
- Adjusted EBITDA: $354.8 million vs analyst estimates of $355.6 million (20.6% margin, in line)
- Management lowered its full-year Adjusted EPS guidance to $3.03 at the midpoint, a 1% decrease
- Operating Margin: 16.7%, in line with the same quarter last year
- Organic Revenue rose 1.8% year on year vs analyst estimates of 1.7% growth (11.1 basis point beat)
- Sales Volumes rose 1.2% year on year, in line with the same quarter last year
- Market Capitalization: $17.54 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From McCormick’s Q3 Earnings Call
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Andrew Lazar (Barclays): asked about visibility into continued positive volume in the consumer segment despite incremental pricing for tariffs. CEO Brendan Foley pointed to expanded distribution, targeted brand marketing, and innovation as drivers for volume stability.
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Peter Galbo (Bank of America): inquired about the drivers behind increased input cost guidance beyond tariffs. CFO Marcos Gabriel detailed that two-thirds of the margin impact came from commodities and tariffs, while the remainder was due to capacity investments, particularly for the HEAT platform.
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Alexia Howard (Bernstein): sought clarification around reformulation activity in flavor solutions and the impact of large retailers’ additive eliminations. Foley explained that growth is coming from high-growth innovator and private label customers, and the company expects more reformulation demand tied to health trends.
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Robert Moskow (TD Cowen): pressed on management’s willingness to accept volume declines to protect margins. Foley stressed the company’s long-term commitment to volume-led growth, noting that temporary volume softness may be considered to balance cost realities and consumer affordability.
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Scott Marks (Jefferies): questioned the outlook for gradual recovery in China’s food service channel. Foley attributed confidence to diversification of distribution, growth in smaller format retail, and favorable year-over-year comparisons in the upcoming quarter.
Catalysts in Upcoming Quarters
Looking ahead, StockStory analysts will be monitoring (1) the company’s ability to execute on targeted price increases without sacrificing volume in key categories, (2) the effectiveness of cost mitigation and supply chain initiatives in offsetting ongoing tariff and commodity headwinds, and (3) sustained momentum in new product launches and e-commerce growth. The evolution of consumer preferences toward health, convenience, and value will also be a critical factor.
McCormick currently trades at $66.16, down from $68.30 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free for active Edge members).
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