What's that scent in the air? It's the aroma of stocks that have taken an 8% hit in just a week, and a 14% one in a month. And if you happen to hold McCormick stocks in your portfolio, you're probably well aware of it. The spice giant's shares are experiencing some turbulence. Let’s delve into the details of what has happened and what the future of these shares analysts see.
McCormick & Co. specializes in spices, seasoning mixes, condiments, and other flavorful products. Manufacturing, distribution, marketing, and more. Also, to find stocks from different sectors, with varying financial and technical stats, you can use the stock screener. While it may not have a "smell" filter (we are not sure about that), this tool offers a wealth of other data to help one find some “sweet-smelling” stocks.
But let’s get back to McCormick. We’ve prepared the chart illustrating the movements of these stocks over the past five days. It's showing a nearly 8.5% drop.
The following chart reveals an even stronger decline since the beginning of 2023.
In other words, the share price has plummeted to $68, the lowest since the Covid-19 pandemic in 2020.
The main reason behind such a drop is the company's performance in the Asia-Pacific region in the third quarter. McCormick reported a substantial 16% drop in sales there, primarily due to the economic slowdown in China. As you can imagine, this is a huge market.
Other figures might not look so bad. EPS turned out to be only 0.31% worse than expected, and the revenue fell short by 0.71% compared to estimates. Simultaneously, McCormick reported a 5.5% increase in total sales compared to Q3 2022. While not catastrophic, these numbers failed to impress the market participants.
The company pointed out several factors negatively impacting its financial report, including the Chinese economic situation, the sale of the Kitchen Basics brand, exit from the Russian customer market, and decisions related to closing low-margin business segments.
Following the report, many analyst firms adjusted their consensus forecasts. For instance, Deutsche Bank lowered its target from $82 to $72, Goldman Sachs from $66 to $64, and BNP Paribas from $95 to $83. The prevailing trend is quite evident. However, the consensus forecast, which is an aggregate of multiple analyst opinions, still maintains a positive outlook for McCormick stocks, projecting a 15% increase over the next 12 months.
Keep in mind that expert opinions can change frequently, so conducting your own analysis before making any trades is advisable.
