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McCormick & Company, Inc (MKC - Analyst Report) has approved an additional share repurchase program, thereby maintaining the trend of returning value to its shareholders from time to time, depending on market conditions.

Under the latest program, the company’s board has authorized the repurchase of up to $400.0 million of its common stock. The company expects to complete its current share repurchase authorization of $400 million, which was authorized in Jun 2010, through 2013.

Share buybacks help the company reduce outstanding share count, thereby increasing earnings per share and return on equity. Apart from bolstering shareholder value, this strategic move will also lift the relatively undervalued share price.

Other than share buybacks, McCormick’s board also declared a quarterly dividend of 34 cents, which will be paid on Apr 29 to shareholders of record as of Apr 15, marking the 89th year of consecutive dividend payments.

In fact, McCormick regularly increases shareholders’ return in the form of dividend and share repurchase activities. McCormick has rewarded its shareholders with nearly $1 billion of cash in the past five years through dividends and share repurchases. Regular dividend payments and share buybacks reflect the company’s confidence in its fundamentals.

Most recently, McCormick delivered better-than-expected first quarter fiscal 2013 earnings of 57 cents per share. Earnings were ahead of the prior-year quarter by 3.6%, driven by a favorable tax rate, higher income from unconsolidated operations and a lower share count. Sales also beat the Zacks Consensus Estimate and grew 3% on a year over year basis, owing to positive volume and product mix and pricing actions in response to high input costs, especially in the consumer business segment.

Overall, we are encouraged by the new innovations, investment in brand marketing and expansion in emerging markets. However, sluggish demand from quick service restaurants in the industrial segment keeps us on the sidelines in the near term.

McCormick holds a Zacks Rank #4 (Sell). Other food companies that warrant a look include Flower Foods, Inc (FLO - Snapshot Report), ConAgra Foods Inc (CAG - Analyst Report), and Kellogg Co (K - Analyst Report). While Flower Foods carries a Zacks Rank #1 (Strong Buy), Kellogg and ConAgra hold a Zacks Rank #2 (Buy).

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