MKC Stock Slumps as McCormick Misses on Earnings, Cuts Forecast

  • Typically under-the-radar McCormick (MKC) is trending on financial media today.
  • MKC stock is under selling pressure because McCormick's earnings results missed Wall Street's expectations.
  • Furthermore, McCormick revised its earnings outlook lower.
MKC stock - MKC Stock Slumps as McCormick Misses on Earnings, Cuts Forecast

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Spice maker McCormick (NYSE:MKC) isn’t usually the talk of the town on Wall Street, but today it’s a trending topic among traders. That’s not necessarily a good thing, though, as MKC stock fell this morning due to the company’s lackluster financial report.

There really wasn’t much to celebrate with McCormick’s earnings report for the second quarter ended May 31, 2022. All of the main points of the press release indicated that McCormick’s financials are in a state of decline.

On a year-over-year basis, McCormick’s quarterly sales declined 1.3% to $1.54 billion. Analysts surveyed by FactSet had expected McCormick’s sales to increase to $1.61 billion. Meanwhile, rising inflation took a toll as McCormick’s cost of goods sold rose 7.6% to $1.01 billion, while the company’s gross margin shrank from 39.5% to 34%.

Other metrics also indicated problems for McCormick. The company’s adjusted operating income totaled $174 million, versus $258 million in 2021’s second quarter. Furthermore, analysts had anticipated adjusted earnings of 65 cents per share, while McCormick only delivered 48 cents per share. In the year-earlier quarter, the company’s adjusted earnings per share was 69 cents.

What’s Happening With MKC Stock?

Early in today’s trading session, MKC stock slid 2.5% and fell below the $85 level. That might not sound like a lot of downside movement, but this is a “safety stock” that isn’t known for swift price action.

Is this a dip-buying opportunity? That’s the billion-dollar question, though McCormick’s forward fiscal guidance probably isn’t going to boost investors’ confidence. With certain exclusions, McCormick revised its fiscal 2022 adjusted operating income growth projection to a range from “comparable” (i.e., unchanged) to an increase of 2%. The previous projected growth range was much more optimistic, at 7% to 9%.

McCormick also changed its projection for fiscal 2022 adjusted earnings per share to a range of $3.03 to $3.08, versus the company’s previously reported guidance of $3.17 to $3.22. McCormick Chairman and CEO Lawrence E. Kurzius cited “persistently high cost inflation and supply chain challenges” and other factors as challenges. Clearly, it’s been rough going for McCormick. As a result, traders might hesitate to spice up their portfolios with MKC stock for a while.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.


Article printed from InvestorPlace Media, https://investorplace.com/2022/06/mkc-stock-slumps-as-mccormick-misses-on-earnings-cuts-forecast/.

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