MCCORMICK & CO. INC. $38 - New York symbol MKC

MCCORMICK & CO. INC. $38 (New York symbol MKC; Income Portfolio, Consumer sector; Shares outstanding: 130.9 million; Market cap: $5.0 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.7%; WSSF Rating: Average) 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. Its top brands include McCormick, Club House, Zatarain’s, Ducos and Schwartz. The company likes to increase its sales through acquisitions. In 2008, it paid $604 million for the Lawry’s and Adolph’s brands of marinades and seasonings. It also bought Canadian honey producer Billy Bee Honey Products Ltd. for $76.4 million. McCormick earned $75.1 million, or $0.57 a share, in its third quarter, which ended August 31, 2009. That’s up 9.5% from $68.6 million, or $0.52 a share, a year earlier. The company’s new businesses were the main reason for the gain. Sales rose just 1.3%, to $791.7 million from $781.6 million. McCormick gets 40% of its sales from outside the U.S., and the strong U.S. dollar during the quarter hurt their contribution. If you disregard exchange rates, sales would have risen by 6.3%. McCormick probably earned $2.33 a share in the fiscal year ending November 30, 2009. The stock trades at 16.3 times that estimate. The recent drop in the U.S. dollar should spur its earnings in 2010. McCormick is a buy.

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