McCormick Stock Plummets on Earnings Flop

MKC stock is headed for a record one-day drop

by Lillian Currens

Published on Jan 24, 2019 at 10:11 AM

The shares of McCormick & Company (NYSE:MKC) are down nearly 12% at $121.25 in early trading, after the company reported fourth-quarter earnings below analysts' expectations, and issued weaker-than-expected full-year guidance. The stock is now the lowest it's been since August, and is pacing for its biggest one-day loss ever. 

MKC stock touched an all-time high of $156.00 on Dec. 13, before quickly pulling back  to its 120-day moving average. Today, the equity is trading far below that trendline, and is set to end beneath its 200-day moving average for the first time since June.

The majority of analysts are cautious about the spice concern, with four of six doling out a tepid "hold" rating, and one issuing a "strong buy." What's more, the consensus 12-month price target of $133.45 only represents about a 10% premium to current levels, and stood at a discount to yesterday's MKC close of $139. 

Likewise, McCormick's short interest grew 9.1% during the past reporting period, now accounting for roughly 9.41 million shares -- a healthy 7.3% of the stock's available float. This represents over six sessions of trading, at MKC's average daily volume. Today, however, MKC is on the short-sale restricted list.

Options bears could also be reaping the rewards of today's drop. The equity currently sports a 10-day put/call volume ratio of 4.29 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), meaning traders have bought to open over four puts for every call in the past two weeks. Plus, this ratio sits higher than 86% of all other readings in the past year, hinting at a healthier-than-usual appetite for bearish bets over bullish ahead of earnings. 

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