McCormick & Company $MKC reported earnings on Tuesday.
This is the company that has grown into the leader in all things related to flavor. Their products include Frank's RedHot, Cholula, and much more.
It's basically impossible to have a kitchen without a McCormick label.
The stock has been a leader in the Consumer Staples sector and has rallied after its last 5 earnings reports. This is one of the longest beat streaks in the S&P 500.
Following the release of its report, the stock opened 5% lower but rallied throughout the day to close nearly flat for the session. It was an epic comeback for the bulls!
What initially spooked the market?
It was all about the guidance.
The market was expecting the company to announce an upward revision of its forward guidance. Instead, they maintained the current guidance.
Let's talk about what else happened.
Here are the earnings stats from MKC 👇
*Click the image to enlarge it
As you can see, McCormick reported a double miss. Their revenue was in line, but the EPS number came in 4 cents below the estimate.
There is a significant gap in the company's segment performance. The Flavor Solutions segment increased its operating income by 28% year-over-year, while the Consumer segment declined by 17%.
This is very unusual, and the management team doesn't expect this to be the case for much longer.
Now let's talk about the technical setup 👇
MKC snapped a 5 quarter beat streak:
McCormick initially fell below the VWAP anchored to the 2024 peak after its report. This has been a key line in the sand for the bulls.
The price rallied throughout the day, closing above the key level. It trapped the bears.
If MKC can hold above 79, the path of least resistance is likely to be higher for the foreseeable future.
