Snapshot

McCormick generated revenue of $6.8 billion, gross profit of $2.6 billion, operating income of $1.1 billion, net income of $789.4 million, and diluted EPS of $2.93 in FY2025. Free cash flow was $740.4 million in FY2025.

In Q3 FY2026, revenue was $2.0 billion, gross profit was $794.9 million, operating income was $217.0 million, net income was $107.6 million, and diluted EPS was $0.39. Market capitalisation was $12.0 billion as of October 2, 2026. Revenue over the TTM to Q3 FY2026 was $7.7 billion, while net income was $1.5 billion and diluted EPS was $5.56 over the TTM to Q3 FY2026.

Growth

Revenue grew 1.73% in FY2025 against FY2024, with a 2.51% compound annual growth rate in FY2022–FY2025 and a 4.08% compound annual growth rate in FY2020–FY2025. Diluted EPS grew 0.34% in FY2025 against FY2024; its compound annual growth rate was 5.15% in FY2022–FY2025 and 1.06% in FY2020–FY2025. Free cash flow grew 14.4% in FY2025 against FY2024.

In Q3 FY2026, revenue rose 4.55% against Q2 FY2026 and 17.4% against Q3 FY2025. Diluted EPS declined 30.7% in Q3 FY2026 against Q2 FY2026 and 53.8% against Q3 FY2025. Free cash flow was $112.1 million in Q3 FY2026, down 66.7% against Q2 FY2026 and down 45.6% against Q3 FY2025. Revenue growth over the TTM to Q3 FY2026 was 13.2%, while free-cash-flow growth was 41.3%.

Profitability

Gross margin was 37.9%, operating margin was 15.7%, pre-tax margin was 13.3%, and net margin was 11.5% in FY2025. Over FY2020–FY2025, gross margin changed by −3.2 percentage points, operating margin by −2.2 percentage points, pre-tax margin by −2.4 percentage points, and net margin by −1.8 percentage points.

Return on equity was 14.2%, return on assets was 6.01%, and return on invested capital was 7.21% in FY2025. In Q3 FY2026, gross margin was 39.3%, up 1.9 percentage points against Q3 FY2025, while operating margin was 10.7%, down 6.0 percentage points against Q3 FY2025. Operating margin also declined 3.6 percentage points in Q3 FY2026 against Q2 FY2026.

Balance sheet

Total debt was $3.6 billion, net debt was $3.5 billion, cash and short-term investments were $95.9 million, and shareholders’ equity was $5.8 billion in FY2025. Working capital was −$924.1 million and book value per share was $21.48 in FY2025.

Net debt was $2.6 billion in Q3 FY2026, a decrease of −$700.7 million against Q2 FY2026 and −$1.2 billion against Q3 FY2025. The current ratio was 0.7× and debt to equity was 0.4× in Q3 FY2026. The lower Q3 FY2026 net-debt balance followed net debt of $3.5 billion in Q4 FY2025.

Cash flow & capital return

Operating cash flow was $962.2 million and capital expenditure was $221.8 million in FY2025, producing free cash flow of $740.4 million in FY2025. Free cash flow represented 93.8% of net income in FY2025. Operating cash flow grew 4.37% in FY2025 against FY2024, while free cash flow grew 14.4% in FY2025 against FY2024.

Dividends paid were $483.0 million and net share repurchases were $13.9 million in FY2025, for capital returned to shareholders of $496.9 million in FY2025. Capital returned to shareholders totalled $2.2 billion over FY2021–FY2025. Weighted average shares were 268.5 million shares in FY2025, and the share count changed 0.75% over FY2020–FY2025. Free cash flow was $112.1 million in Q3 FY2026.

Valuation

Market capitalisation was $12.0 billion as of October 2, 2026. P/E was 8.0× as of October 2, 2026, below the 26.7× median over the five fiscal years to FY2025 and the 27.0× median over the ten fiscal years to FY2025; it was also below the 13.4× industry median as of October 2, 2026.

P/S was 1.6× and P/B was 1.6× as of October 2, 2026. P/S was below the 3.1× five-year median and 3.4× ten-year median, but above the 0.6× industry median, in the respective periods ending October 2, 2026. P/B was below the 4.0× five-year median and 5.1× ten-year median, while above the 1.4× industry median, in the respective periods ending October 2, 2026.

EV/Sales was 1.9× as of October 2, 2026, below the 3.7× five-year median and 3.9× ten-year median but above the 0.8× industry median. EV/Cash flow was 15.7× as of October 2, 2026, below the 38.1× five-year median and 34.3× ten-year median.

What changed since last quarter

Revenue was $2.0 billion in Q3 FY2026, rising 4.55% against Q2 FY2026 and 17.4% against Q3 FY2025. Management attributes the year-over-year sales increase in Q3 FY2026 primarily to the acquisition of a controlling interest in McCormick de Mexico, favorable pricing, and favorable foreign currency rates, partly offset by unfavorable volume and product mix.

Gross margin was 39.3% in Q3 FY2026, down 0.9 percentage points against Q2 FY2026 but up 1.9 percentage points against Q3 FY2025. Management attributes the year-over-year gross-margin improvement in Q3 FY2026 to the acquisition, favorable pricing, and CCI cost savings, partly offset by commodity and freight costs. Operating income was $217.0 million and operating margin was 10.7% in Q3 FY2026, with the margin down 3.6 percentage points sequentially and 6.0 percentage points year over year. Management cites higher SG&A related to the acquisition, brand marketing, and technology, while special charges, higher interest expense, and a higher effective tax rate affected reported EPS.

Open questions

• How will the consolidation of McCormick de Mexico affect the mix of acquired and organic sales growth?
• What will be the ongoing effect of special charges on reported earnings?
• How will higher commodity, freight, interest, and technology costs affect future margins?
• How will the pending merger with Unilever Foods affect debt, liquidity needs, and capital allocation?

Sources

• Form 10-Q filed October 1, 2026 — management’s discussion and analysis