McCormick & Company, Incorporated (NYSE:MKC) with its market capitalization of $9.92B manufactures, markets and distributes spices, seasoning mixes, condiments and other flavorful products to the entire food industry. McCormick has two business segments: consumer and industrial. The company is a considered a global pacesetter in the provision of spices, seasonings, specialty foods and flavors with its strong portfolio of more than 250 brands sold in the U.S. and International markets.
McCormick’s impressive EPS growth, its consistent innovation on product lines, cost saving initiatives, aggressive buybacks and strategic acquisitions have endeared the stock to traders and investors over the last couple of years. In fact, the stock has recorded a 20% increase in the purchase of seasoning, spice and herbs.
Nonetheless, the outlook on McCormick has been somewhat cautious in recent times as weak demand in the Asia-Pacific region and the Americas continue to impact the bottom line. Hence, all eyes were on the first quarter (Q1 2015) results that the company posted yesterday.
Impressive Financial Performance
McCormick reported its first quarter results yesterday in which it reported earnings of $0.70 per share to beat the consensus analysts’ estimate of $0.64 per share. The reported earnings increased from the $0.62 per share that was reported in the same quarter last year to mark a 13% y-o-y increase.
The company also reported growth in its bottom line as it delivered revenue of $1.01B to beat the consensus analysts’ estimate of $986M by $24.88M. The reported revenue marks a 1.7% year-over-year improvement from the same period last year.
An interesting point to note in the reported financials is that the company’s first quarter sales increased by 2% from the year-ago quarter to mark a 6% increase in a constant currency. The company reported that its consumer business sales increased by 5% in constant currency. In addition, its industrial business sales increased by 7% in constant currency. The growth recorded across McCormick’s reporting segments has been driven by increased volume, product mix and product innovation among others.
Impressive Response to Performance
The market has reacted positively to the impressive financials that McCormick reported yesterday as the stock rose majestically to set a new 52-Week high at $77.79. The stock soared 0.44% in pre-market trading. As at 11:35AM EDT today, shares of McCormick were up 2.66% to $77.12 after it has touched an intraday high of $77.45.
How to Trade MKC Options
The chart above shows how the shares of McCormick have traded within the last one year. The stock has experienced three important support and resistant levels to form rectangle patterns as shown by the three shaded circled areas in the chart.
In the first rectangle pattern, McCormick had a $68.9 support and the $71 resistance point that held from April 2014 to June 2014 before the stock had a breakout to $72 (blue arrow). In the second rectangle, the stock had a $65 support and the $69.5 resistance point that held from August 2014 to November 2014 before the stock had a breakout to $73 (blue arrow).
In the third rectangle, shares of McCormick currently have a $71 support and the $76 resistance point that held from December 2014 to the last couple of days before the stock had a breakout to the current $77.07(blue arrow).
The McCormick breakout is still in place has the stock has broken out above the resistance point consistently in the last three sessions. I recommend buying MKC call options. I am especially interested in the MKC Jun 2015 75.000 call (MKC150619C00075000) at an asking price of $2.95.
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