Wednesday, March 26, 2014

Seeking Alpha: McCormick Spanks The Skeptics, But Not Exactly A Bargain

Spice, seasoning, and packaged food giant McCormick (MKC) has long enjoyed a privileged position in the food sector, as investors have been willing to pay a premium for shares in a company that holds uncommonly high market share and ups its dividend like clockwork. The shares were caught in the downdraft that saw other food stocks trailing the S&P 500 after mid-2013, but took an even steeper move down when management handed out weak 2014 guidance at the end of January.

Analysts suddenly started worrying about valuation on stock where valuation really hadn't mattered before, but then first quarter earnings came in higher than expected and sent the shares up more than 5%. McCormick is still expensive, but bulls can build a credible argument that the company's consistent double-digit ROICs and dividend hikes merit a much lower discount rate and that the shares are still a worthwhile holding for long-term investors.

The full article is here:
McCormick Spanks The Skeptics, But Not Exactly A Bargain

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