McCormick & Co. Inc. reported lower-than-expected earnings for the summer quarter yesterday, but analysts shrugged off the downturn, saying that they're pinning their hopes for the spicemaker's rebound on this fall's pumpkin pies and mulled cider.
The Sparks-based company, which had warned several months ago that its third quarter probably would be weak, said it sold $432 million worth of spices and flavorings for the three months ended Aug. 31, up 2 percent from the same quarter a year ago.
But the company's profits fell nearly 25 percent to $19.9 million, or 25 cents a share, from $26.4 million, or 33 cents a share, a year ago.
Although most Wall Street analysts had expected the company to earn profits of about 27 cents a share this quarter, McCormick's shares nevertheless broke ranks with the stock market's general decline yesterday and finished up 25 cents at $21.9375 in Nasdaq trading yesterday.
Joseph J. Jordan, who has recommended McCormick stock to his clients at PNC Institutional Investment in Philadelphia, said he was surprised and disappointed by yesterday's announcement but remained optimistic. He had been predicting the company would earn 31 cents a share.
Although he now plans to reduce his predicted earnings for this year and next, he said he won't downgrade his current "outperform" rating on the stock because it is trading at a lower multiple of its earnings than most food companies.
But, he said, he's counting on a "visible turn" in the company's fourth quarter, which will end Nov. 30.
McCormick's chief financial officer, Robert G. Davey, said yesterday the company expects "to have a strong fourth quarter."
The problems that ate away profits this summer are basically the same ones that have troubled the company for nearly a year, he said.
In addition, Mr. Davey said, last year's summer numbers were inflated by a fall price increase that prompted customers to stock up ahead of time.