McCormick & Co.'s stock price surged more than 5 percent Thursday after the company reported sales and operating results for its third quarter that exceeded analysts' expectations.
The Sparks-based spice company's shares were up almost 5.4 percent to $101 each in trading Thursday.
McCormick's actual earnings dropped in its third quarter due to costs related to its $4.2 billion acquisition of the maker of Frank's RedHot sauce and French's mustard.
McCormick earned $108.2 million in the three months ended Aug. 31, down from $127.7 million in the same period last year. Per-share earnings dipped to 85 cents from $1.
But Wall Street focused on the operating results, which exceeded expectations.
"It was a solid quarter, in our view, with McCormick generating healthy sales growth in both its consumer and industrial segments," wrote Brittany Weissman, an analyst with Edward Jones, in a research note. "McCormick benefited from solid results in its core business as well as its recent acquisition of Reckitt Benckiser Foods."
The Evening Sun
McCormick's sales in the quarter rose 9 percent to $1.19 billion, from $1.09 billion a year earlier.
Its earnings were suppressed by $31.1 million in costs related to the Reckitt Benckiser acquisition. Backing out acquisition-related costs and another special charge, McCormick said its pre-tax operating income rose 18 percent to nearly $204 million.
"Our strong third-quarter financial results continue our growth momentum and reflect the effectiveness of our strategies and engagement of our employees around the world," said Lawrence E. Kurzius, McCormick's chairman, president and CEO.
"We are especially pleased to see solid growth in the Americas, given many of McCormick's other food peers are struggling to grow sales," she wrote. "McCormick is increasing its marketing spending and innovation, along with increasing prices, to help drive sales growth and we believe this quarter highlighted McCormick's early success with this strategy."