Spice Up Your Portfolio: Why McCormick & Co. Is a Buy
McCormick & Co. (NYSE:MCK) is certainly a well-known brand. Chances are that you have some of its products, including the company’s seasonings and spices, right in your kitchen. McCormick not only manufactures, markets, and distributes spices and seasoning mixes, but it also makes condiments and other flavorful products for retail outlets, food manufacturers, and foodservice businesses. It operates in two segments, Consumer and Industrial.
The Consumer segment offers spices, herbs, seasonings, and dessert items directly, as well as through distributors or wholesalers to various retail outlets, including grocery stores, mass merchandise stores, warehouse clubs, and discount and drug stores, as well as supplies private label items. This segment markets its products under the McCormick, Lawry’s, Club House, Zatarain’s, Thai Kitchen, Simply Asia, Ducros, Schwartz, Kamis, Vahiné, DaQiao, and Kohinoor brand names. The Industrial segment provides seasoning blends, spices and herbs, condiments, coating systems, and compound flavors directly, as well as through distributors to food manufacturers and foodservice customers.
The stock is just under its 52-week high, trading around $71.50. After seeing its recent earnings, can this stock, which yields 2 percent and trades at a slight premium to the market, spice up your portfolio with some growth? A review of the company’s recent quarter is warranted.
In its most recent quarter, the company delivered. McCormick’s second-quarter sales rose 3 percent compared to the year-ago period. The rate of growth in international markets was particularly strong this period, including incremental sales of Wuhan Asia Pacific Condiments, which was acquired in May 2013. This added 3 percentage points to international sales growth. One slightly off-putting measure was sales in the Americas. The company reported lower sales in the Americas, largely as a result of competitive pressure for its consumer business.