For dividend-hungry investors, McCormick (MKC 1.11%) could be a financially sturdy stock pick during these turbulent times. In this clip from "3 Minute Stocks Updates" on Motley Fool Live, recorded on June 22, Motley Fool contributor Rachel Warren assesses McCormick's quarterly performance.
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Rachel Warren: This is a Fortune 500 company. This is a dividend aristocrat, so they have 36 years and counting of consecutive dividend raises to their name. The yield, last I checked, about 1.77%, so a nice little dividend there. Looking at the first quarter of fiscal 2022, sales were up 3% year-over-year, 4% in constant currency. The company reported earnings per share down slightly from the prior year, but earnings-per-share of $0.57. Operating income was $207 million in the first quarter compared to $236 million in the year-ago period. One thing as well that stuck out to me was McCormick did reiterate its sales, operating income, and earnings per share outlook for the year. That's something I think that's very important as we've seen a lot of companies that have either had to withdraw or lower guidance, but they're on track with that right now.
The company divides its revenue into two different segments, flavor solutions and its consumer segment. Flavor solutions' sales growth, they said, was driven by differentiated customer engagement, a lot of pricing actions they've taken. In the Americas, flavor solutions sales were up 12% year-over-year, Asia-Pacific region, 3% year-over-year, the AMEA region, 15% year-over-year. This has been a really strong area of growth for the company whereas consumer segment sales were down slightly at 2% year-over-year compared to 35% year-over-year growth in the first-quarter of 2021. The company was seeing higher-cost inflation, partially offset by pricing actions and cost savings contributed to a 220 basis point decline in gross profit margin. It was a mixed quarter. We saw some really strong growth again in flavor solutions. This is because you're seeing a lot more people ordering products from restaurants, having food delivered. The company attributed growth in this segment and recovery in this segment to the continued demand recovery of away-from-home products. Even though people are still cooking at home, they're not doing it necessarily at the rate they did earlier in the pandemic. That is one area as well where you could perhaps trace it back to that slight decline in consumer segment sales. Overall, I think a good quarter for the company and a nice dividend as well.
