Is McCormick Stock Benefiting From 'Seller Exhaustion' After Q3 Earnings? PreMarket Prep Breaks It Down

Is McCormick Stock Benefiting From 'Seller Exhaustion' After Q3 Earnings? PreMarket Prep Breaks It Down

Third-quarter earnings season does not ramp up until next week, with some big banks announcing results.

On Thursday, spice and grocery manufacturer McCormick & Company, Incorporated MKC revealed its third-quarter report, and the price action following that announcement makes it the PreMarket Prep Stock Of The Day.

McCormick Has Mind Of Its Own In 2022: After ending 2021 at $96.61, the issue made a new all-time high in March at $107.35 and was able to hold in the triple digits until early-to-mid May.

As late as August, it was able to trade in the lower $90 handle, but weakened to end the month at $84.07.

The issue succumbed to market forces in September, and the company issuing lower third-quarter guidance in early September sent investors to the exit. It found, at least for now, a bottom on Sept. 30 at $71.19 and ended Wednesday’s session just above that level at $73.31.

McCormick's Q3 Miss: Before the open Thursday, the company reported quarterly earnings of 69 cents per share, which missed the analyst consensus estimate of 94 cents by 26.6%.

The company reported quarterly sales of $1.6 billion, which missed the analyst consensus estimate of $1.78 billion by 10.34%.

PreMarket Prep's Take: When the issue was being covered on the show Thursday, it was trading flat on the session ($73.31).

“The reason it is not down more is that it has 'seller exhaustion' — the stock has already been hammered as of late, and just maybe there is none left to sell off the poor report,” said co-host Dennis Dick. 

 “I would be careful shorting this stock after what Helen Of Troy Ltd. HELE did after its second-quarter beat was accompanied by a guidance cut for the third quarter.”

MKC Price Action: After a higher open Thursday ($74.13 to $73.31), the issue caught a wicked bid and rallied to $77.97, and sharply reversed course. McCormick closed Thursday's session at $72.48 and was trading 2.05% higher at $73.98 in Friday's session. 

Watch the PreMarket Prep discussion on McCormick here:

Photo via Shutterstock.

Posted In: PreMarket PrepEarningsNewsTechnicalsTop StoriesTrading Ideas