McCormick & Company, Incorporated (MKC Quick QuoteMKC - Free Report) is likely to register top-line growth when it reports fourth-quarter fiscal 2024 earnings on Jan. 23. The Zacks Consensus Estimate for revenues is pegged at $1.77 billion, implying a 0.8% increase from the prior-year quarter’s reported figure. 

The consensus mark for earnings has dipped by a penny in the past seven days to 77 cents per share, indicating a 9.4% fall from the figure reported in the year-ago period. MKC has a trailing four-quarter earnings surprise of 13.8%, on average.

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Factors Likely to Influence MKC’s Upcoming Results

McCormick achieved a significant milestone by delivering overall global positive volume growth in the third quarter of fiscal 2024, indicating improving trends across both business segments. In the Consumer segment, the company recorded solid volume growth despite facing a challenging macroeconomic environment in China. Meanwhile, in the Flavor Solutions segment, sequential volume improvements were realized, driven by strong growth in Branded Foodservice. This rebound highlights McCormick’s ability to navigate complex macroeconomic conditions, which bodes well for the quarter under review.

McCormick's strategic investments in innovation and distribution expansion have also been yielding positive results. The company continues to bolster its position across major markets and core categories by focusing on growth levers such as brand marketing, product and packaging innovation, category management and proprietary technology. 

On its last earnings call, the company stated that for 2024, it anticipates witnessing a favorable impact of pricing actions undertaken in the prior year. Volume trends are likely to improve due to solid brands and targeted investments. However, the company’s decision to discontinue the low-margin business and sell the canning business, though crucial for the long run, is likely to put some pressure on volume during 2024.

Concerns Clouding MKC’s Growth

McCormick faces ongoing challenges from a fragile consumer spending environment, where value-seeking behaviors have become more prominent. This trend is concerning as it could result in slower growth in its higher-margin product categories.

MKC anticipates a high-single-digit increase in brand marketing expenditures for fiscal 2024, reflecting a double-digit rise in investments. It expects to accelerate brand marketing investments in the fourth quarter compared with the third quarter. For the fourth quarter of fiscal 2024, management expects SG&A expenses to increase year over year due to IT and digital transition costs. 

The fourth-quarter operating profit is likely to be flat year over year. Margin expansion is also being constrained by ongoing supply-chain investments and inflationary pressures. Management expects to witness a low-single-digit increase in cost inflation for fiscal 2024.

Earnings Whispers for MKC

Our proven model predicts an earnings beat for McCormick & Company this time. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here.

McCormick & Company carries a Zacks Rank #3 and has an Earnings ESP of +1.02%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks With the Favorable Combination

Here are some other companies worth considering, as our model shows that these also have the right combination of elements to beat on earnings this reporting cycle.

Clorox (CLX Quick QuoteCLX - Free Report) currently has an Earnings ESP of +1.89% and a Zacks Rank of 2. The company is likely to register a top and bottom-line decline when it reports second-quarter fiscal 2025 numbers. The Zacks Consensus Estimate for Clorox’s quarterly revenues is pegged at $1.64 billion, which suggests a decrease of 17.8% from the prior-year quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Clorox’s quarterly earnings per share is pegged at $1.38, indicating a 36.1% decline from the year-ago period. CLX has a trailing four-quarter earnings surprise of 45.9%, on average.

Kimberly-Clark Corporation (KMB Quick QuoteKMB - Free Report) currently has an Earnings ESP of +1.01% and a Zacks Rank of 3. The company is likely to register a top and bottom-line decline when it reports fourth-quarter 2024 numbers. The Zacks Consensus Estimate for Kimberly-Clark’s quarterly revenues is pegged at $4.85 billion, indicating a 2.5% decrease from the figure reported in the prior-year quarter. 

The Zacks Consensus Estimate for Kimberly-Clark’s quarterly earnings of $1.49 suggests a drop of 1.3% from the figure reported in the year-ago quarter. KMB has a trailing four-quarter earnings surprise of 12.1%, on average.

Church & Dwight (CHD Quick QuoteCHD - Free Report) currently has an Earnings ESP of +0.11% and a Zacks Rank of 3. The Zacks Consensus Estimate for fourth-quarter 2024 earnings per share is pegged at 77 cents, which implies a roughly 18.5% increase year over year.

The Zacks Consensus Estimate for Church & Dwight’s quarterly revenues is pegged at $1.56 billion, which indicates growth of 2.4% from the figure reported in the prior-year quarter. CHD has a trailing four-quarter earnings surprise of roughly 10%, on average.