MCCORMICK & CO. INC. $59 - New York symbol MKC

MCCORMICK & CO. INC. $59 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 120.1 million; Market cap: $7.1 billion; Price-to-sales ratio: 1.8; Dividend yield: 2.1%; TSINetwork Rating: Average; www.mccormick.com) is the world’s leading maker of spices, herbs, seasonings, flavourings, sauces and extracts. It sells its products to consumers, restaurants and industrial food processors. Top brands include McCormick, Club House, Zatarain’s, Ducos and Schwartz.

The company is starting to benefit from its recent purchases of spice makers and food companies in India and Eastern Europe. Emerging markets now supply 14% of its sales. As well, its ongoing cost-cutting plan should save it $45 million in its current fiscal year.

In its fiscal 2012 second quarter, which ended May 31, 2012, McCormick’s sales rose 11.4%, to $984.0 million from $883.7 million a year earlier. Acquisitions accounted for about half of this gain. Earnings rose 9.2%, to $80.4 million, or $0.60 a share. A year earlier, McCormick earned $73.6 million, or $0.55 a share.

The company has paid dividends since 1925, and has raised its payout every year for the past 26 years. The current annual rate of $1.24 yields 2.1%.

As well, the stock trades at 19.4 times McCormick’s projected 2012 earnings of $3.04 a share. That’s still a reasonable p/e ratio in light of the company’s rising earnings and overseas sales.

McCormick is a buy.

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