Like many budding cooks, I'm familiar with McCormick (NYSE:MKC) spices; they're essential for adding flavor to my culinary disasters. (Thankfully, I have a forgiving wife.) The company has certainly had a spicy run in recent months, and this quarter is no exception.

Revenues were up 6% to $663 million, and gross margins were boosted 150 basis points year over year, to 40.6%. Given the continued cost pressures from energy and raw material inputs, that is no mean feat, and it was driven by cost reductions and a more favorable pricing mix. Restructuring charges of $17 million cut deep into profit margins, which dropped to 6.4% from 7.7% last year.

Recently, the company has boosted growth through careful acquisitions, including the Zatarain's and Simply Asia brands, which seem to be paying dividends. The company boosted its earnings forecast for the year by a few pennies, but including restructuring charges, 2006 earnings per share of $1.45 to $1.48 are still predicted to lag last year's by a few cents.

While the company has near-dominant control over the supermarket aisles, investors have obviously bid this one up to premium levels. With a P/E of 24, it is clearly expensive relative to its long-term earnings growth rate of 6%-8%. However, it could also be classified as an "inevitable."

The key question for investors here: What's a fair price for McCormick's stock? I'm inclined to suggest that much lower levels would create a value opportunity. A P/E ratio in the mid-teens would make the company more value-priced, with a little premium for its strong market position and decent returns on equity (roughly 25%). Competitors International Flavor and Fragrance (NYSE:IFF) and Unilever (NYSE:UL) aren't going away anytime soon, which should continue to make McCormick's life difficult in a low-margin industry. This Fool will continue to spice up his foods for his wife, but leave this stock on the shelf.

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Fool contributor Stephen Ellis doesn't hold shares in any companies mentioned. You can see his holdings for yourself . The Motley Fool recommends adding a heaping tablespoon of its disclosure policy to every concoction.