McCormick & Company's (NYSE: MKC) share price has been under pressure for many quarters as tepid growth, macroeconomic headwinds, and deteriorating analyst sentiment have sapped investor confidence. However, despite the negative trends, this is a high-quality, blue-chip consumer staple now trading at a deep value level.
The latest hit to confidence was the planned merger with Unilever’s (NYSE: UL) food business, a highly synergistic acquisition that will enable value gains and growth. It sparked a sharp decline in stock price, putting MKC shares below $50 intraday and near the 16X earnings multiple. At this level, MKC shares trade below the low end of their historical range, with the potential to more than double over time.
The opportunity for unlocking value in 2026 lies in the Unilever acquisition. The concern is the cost: at nearly $45 billion, the cash-and-stock deal threatens dilution and balance-sheet impairment, and undervalues Unilever.
The deal implies a nearly 14X multiple on enterprise value, below MCK’s valuation and well below the target range. The takeaway is that near-term headwinds exist, including execution risk, but the rewards far outweigh them.
McCormick & Company Outperforms in Q1
McCormick & Company had a solid quarter in Q1, with acquisitions and organic growth contributing to the strength. The company reported $1.87 billion in net revenue, 16.7% better than last year and approximately 450 basis points (bps) better than MarketBeat’s reported consensus. The gain was driven by 1.2% organic growth, a 3.14% foreign exchange tailwind, and 12.4% contribution from recently acquired McCormick de Mexico. Segmentally, Consumer grew by 24%, underpinned by strength in the Americas, while Flavor grew by 6.2%, with gains across all major regions.
Margin was another area of strength. The company’s quality improvements, pricing actions, and growth enabled improvements in gross and operating margins. The net result was a 19% increase in adjusted operating income and a 10% increase in adjusted earnings, with adjusted EPS of 66 cents, more than 1000 bps above forecasts.
Guidance was an area of weakness, as it was only reaffirmed at its prior level, but it remains strong, as it forecasts organic growth and margin improvement, along with the impact of the acquisition. Assuming the Unilever deal goes through, McCormick’s revenue will more than double.
Analysts Respond Favorably, Notes of Caution Remain in the Outlook
Analysts responded favorably to McCormick’s Q1 results and guidance update, with numerous reaffirmed ratings and price targets. However, a note of caution remains, as several price target reductions were also recorded, indicating a low-end range. Even so, the low-end range offers an upside opportunity, as the stock is trading below it. In this scenario, MKC stock could rise by more than 10% and still remain deeply undervalued for investors.
Institutional activity is among the risks in early 2026. The group owns a substantial 80% of the stock and distributed in early Q1. The balance of activity is slimly in favor of sellers, presenting a headwind that may persist as the year progresses. Among the signals investors should look for is a reversion to accumulation, which may begin at any time. Headwinds and risks aside, the valuation and dividend outlook combine for a favorable risk/reward profile.
McCormick’s dividend is at the high end of its historical range, approximately 3.7%, and shares are near $50. The payout is reliable, as it has been increased for 40 consecutive years, and the trend is unlikely to be broken. The pace of increases may slow from the current, high-single-digit compound annual growth rate in 2026, but is not expected to end. With UL also a solid dividend payer, the likely story is that dividends will increase to match the new company size, providing another catalyst for share price action when the deal closes. The risk from that vector is regulatory hurdles, as the two will create one of the largest, if not the largest, flavor-focused companies worldwide.
MKC Stock Fall Triggers Buying Frenzy
MKC’s stock price plunge, triggered by the UL deal, triggered a response of its own. After setting an early low, the stock reversed course intraday, reclaiming a portion of its losses. Technical indicators, including divergent moving average convergence/divergence and a bullish crossover in the stochastic oscillator, hint at a potential near-term rebound and bottoming activity at these levels.
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The article "McCormick & Company Falls to Value Levels Income Investors Love" first appeared on MarketBeat.
