On October 6, the company gave a lackluster earnings report. Analysts expected revenue to come in at $1.60 billion.
MarketBeat.com - MarketBeat Where the real disappointment came in was the bottom line. The company earned 69 cents per share. The forecast was for a share of 80 cents. The 80 cents per share was the same number the company had posted in the same quarter in the previous year.
After a post-earnings dip, the stock is back to its pre- earnings level. The company may be delivering an optimistic outlook for the supply chain issues that have bedeviled it since the start of the Covid-19 pandemic.
In this article, we will look at what McCormick said on its earnings call, as well as why it might be a good investment for income-oriented investors.
Many analysts have talked about an upcoming earnings recession. Businesses will no longer be able to pass along their higher costs to consumers. There is a belief that the effect of interest rate hikes and inflation will make consumers less willing to spend.
If that is the case, a company like McCormick could be vulnerable. The company's products are sold at a premium to house brands if you're the person who does the cooking and shopping in your home. The price difference may be enough to cut down on sales as consumers look to cut back.
That isn't what the company's numbers show The revenue is holding up. The company is adding customers. The revenue numbers show that.
Earnings can't be said of the same. In the last two quarters, the company has missed its earnings targets. The losses were significant in the prior quarter and this quarter.
The CEO said on the earnings call that the company had passed an "inflection point" regarding earnings. He said the company was starting to recover cost inflation that had outpaced their pricing actions.
A lot of corporate speak. As it begins to command higher margins, the company should be profitable.
The stock is likely to have some upside if that happens. It will take another quarter to confirm that this is happening. It could be difficult if the recession gets more entrenched.
The stock of the company is down. The stock is down 5% in the last year, but it's through a slightly longer view.
If you pull back even further, you can see that the stock is down 9%. Revenue is up 25% during that time. Revenue growth should keep the stock from falling too far. The good news is that there is no evidence that earnings are getting better.
The investors are buying the dividends. Each of the last 36 years, the company has increased its dividends. There is no reason to think that the dividend is in danger.
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