Confused investor, strange stock behavior

McCormick will be showing a profit on March 30th

McCormick & Company, Incorporated (NYSE: MKC) is an American multinational food company that manufactures, markets and sells spices, seasonings, seasonings and other flavoring products for the entire food industry. The company sells its products in 160 countries and territories through retail stores, food manufacturers, food service companies and e-commerce channels.

McCormick stock is up 32% year over year and is up nearly 50% since hitting a 52-week low of $ 58.45. MKC’s shares were down 0.4% this afternoon to $ 97.49, about 17% off their September high of $ 105.54. McCormick stock also offers a forward dividend of $ 1.36 and a dividend yield of 1.55%. The food company has been paying dividends to shareholders since 1972.

MKC is expected to release its financial results for the first quarter of 2021 ahead of the opening on Tuesday, March 30th. In recent history, McCormick has exceeded earnings expectations for two of the four most recently released earnings reports and matched estimates for another. For the first quarter of 2020, McCormick beat analysts’ estimates by a margin of $ 0.02 and reported earnings per share (EPS) of $ 0.54. For the second quarter of 2020, MKC increased its earnings per share to $ 0.73, beating expectations with a margin of $ 0.15. For the third quarter of 2020, McCormick posted another surge in earnings, rising to $ 0.76 per share, in line with analyst estimates. In its most recent quarterly report, McCormick reported earnings per share of $ 0.79, falling short of expectations by $ 0.02.

From a fundamental perspective, McCormick doesn’t have much to offer investors beyond its long history of paying dividends. Given that MKC only has $ 423.6 million in cash to settle $ 5.05 billion in debt, the company’s balance sheet is far from stable. Likewise, sales and net income have not been consistent in recent years.

Even so, in fiscal 2020, McCormick was able to increase revenue by approximately $ 250 million, or 4.7%, and increase net income by $ 45 million, or 6.36%. However, McCormick stock continues to trade at a high price-to-earnings-ratio of 31.50. MKC’s price-to-earnings ratio of 29.67 is also relatively expensive, giving McCormick stock little hope of significant appreciation in the years to come.

Regardless, now seems like an excellent time to take MKC’s next step with options. The security’s 25% Schaeffer Volatility Index (SVI) is in the 1st percentile of its annual range, meaning options traders are currently pricing in extremely low volatility expectations for the stock.


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