McCormick & Company - Growth & Income

McCormick & Company (MKC) continues to slowly grow as sales in the Americas remain steady while they heat up in China. MKC has surprised on estimates the last 4 quarters by an average of 6%.

McCormick manufactures spices, herbs, seasonings and flavoring for consumers, food manufactures and food service businesses. Founded in 1889, the company has a global reach through several brands.

The company has recently expanded its global presence when it announced, on June 29, that it signed an agreement to purchase a minority share in Eastern Condiments Private Limited, an Indian- based spice business.

McCormick will acquire 26% of the business at the cost of about $35 million. It is McCormick's second joint venture in India.

India is the world's largest consumer of spices. The acquisition is an attractive way to increase market share for the company in India and beyond. Eastern's products are exported to 15 other countries.

McCormick Surprised By 8.9% in the Fiscal Second Quarter

McCormick reported its fiscal 2010 second quarter results on June 24 and surprised by 4 cents on the Zacks Consensus. Earnings per share were 49 cents compared to 38 cents in the year ago period.

The earnings surprise wasn't much of a surprise because the company has met or beaten every quarter over the last 5 years. It's an impressive record.

Sales climbed 5% due to higher volume and product mix as well as favorable currency exchange rates. Chinese sales rose 18% and the Americas were solid. Only certain markets in Europe were weak in the quarter.

Both the Consumer and Industrial segments saw sales increases. The Industrial sales outpaced the Consumer, rising 7% compared to just 4%.

2010 Guidance At the Upper End of the Range

The company did not raise guidance for the full year but did say that it expects to be at the high end of its previous range of $2.49 to $2.54 per share.

The analysts are at the high end of the guidance with their estimates. The 2010 Zacks Consensus Estimate has moved to $2.53 from $2.51 per share in the last 60 days.

Fundamentals

Analysts expect 2010 earnings growth of 7.8% and a 5-year average earnings growth of 9.5%.

The company yields 2.6%, which is much higher than its industry, which pays, on average, no dividend at all.

McCormick & Company is a Zacks #2 Rank (buy) stock.

The stock has been hot in the last year and is now trading near a 2-year high.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

 
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