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McCormick Up 26% This Year, Dividend Yield At 2.1%
12/26/2012 5:56:00 PM
By: Investor's Business Daily
McCormick & Co. ( MKC ), a maker of spices and other food products, has seen profits and revenue grow slowly but steadily in recent years, thanks mainly to overseas acquisitions.
The stock has risen 26% this year, about double the S&P 500's increase. The company also offers a quarterly dividend of 34 cents a share, good for an annual dividend yield of 2.1%, in line with the S&P 500 average. McCormick has tripled the payout over 10 years.
A check of the stock's chart shows that it's working on a flat base with a potential buy point at 66.47. It has been trading in a tight fashion and is just 4% below its all-time high as it gets support at its 50-day line.
Profit for the fiscal third quarter that ended in November rose a better-than-expected 13% from a year earlier, improving on the prior quarter's 9% gain. Revenue rose 6%, the smallest increase in six quarters.
While those figures are weak, the company's four-year earnings stability factor is 2 on a scale of 0 (most stable) to 99 (least stable). Profit continued to grow, on a quarterly and annual basis, through the 2008-09 recession.
McCormick, whose many brands include Lawry's and Thai Kitchen, has been growing mainly through acquisitions in Europe and Asia. In August, the company said it would buy Chinese bouillon maker Wuhan Asia-Pacific Condiments to expand in China. The deal is expected to close in 2013.
Despite the acquisition spree, the company's debt-to-equity ratio stands at a manageable 64%.
Zacks Equity Research said Dec. 19 that it's "encouraged by the company's strong brand portfolio" and its focus on "enhancing its products to remain competitive." It has a "neutral" rating on the stock.
McCormick has raised prices and cut costs to help offset higher costs for wheat, onion and other raw materials. Its pretax margin of 13.5% last year was second highest in the 16-member Food-Miscellaneous Preparation industry group.
McCormick's Accumulation-Distribution Rating is C+ and its up-down volume ratio is 1.4, indicating net positive demand for the shares.
On the downside, McCormick's 79 Composite Rating ranks it third in a weak industry group.