As the Q2 earnings season wraps, let's dig into this quarter's best and worst performers in the consumer staples industry, including McCormick (NYSE:MKC) and its peers.
The consumer staples industry comprises companies engaged in the manufacturing, distribution, and sale of essential, everyday products. These products, also known as "staples," are fundamental to daily living and include packaged food, beverages and alcohol, personal care, and household products. Consumer staples stocks are considered defensive investments because consumers often purchase them regardless of economic conditions. To stand out, companies must have some combination of brand recognition, product quality, and price competitiveness.
The 4 consumer staples stocks we track reported an ok Q2; on average, revenues missed analyst consensus estimates by 0.9%. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, and while some of the consumer staples stocks have fared somewhat better than others, they collectively declined, with share prices falling 2.1% on average since the previous earnings results.
McCormick (NYSE:MKC) The classic red Heinz ketchup bottle’s competitor, McCormick (NYSE:MKC) sells food-flavoring products like condiments, spices, and seasoning mixes.
McCormick reported revenues of $1.64 billion, down 1% year on year, in line with analysts' expectations. It was a solid quarter for the company, with a decent beat of analysts' organic revenue growth and earnings estimates.
Brendan M. Foley, President and CEO, stated, "We are pleased with our performance for the first half of the year, which was in line with our expectations and reflects the success of our prioritized business investments to drive improving results and trends. The investments we made in our Consumer segment drove substantial sequential volume improvement in the second quarter, leading to volume growth, and we expect continued momentum for the second half of the year. In Flavor Solutions, lower demand from some quick service restaurant and packaged food customers combined with the timing of customer activities, impacted our second quarter performance. We believe our collaboration and strong innovation pipeline with our customers will drive improved volume performance in the second half of the year.
McCormick scored the biggest analyst estimates beat of the whole group. The stock is up 2.1% since the results and currently trades at $69.09.
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Best Q2: Constellation Brands (NYSE:NYSE:STZ) With a presence in more than 100 countries, Constellation Brands (NYSE:STZ) is a globally renowned producer and marketer of beer, wine, and spirits.
Constellation Brands reported revenues of $2.66 billion, up 5.8% year on year, falling short of analysts' expectations by 0.4%. It was a solid quarter for the company, with optimistic earnings guidance for the full year and a decent beat of analysts' gross margin estimates.
Constellation Brands delivered the fastest revenue growth among its peers. The stock is down 1.8% since the results and currently trades at $254.09.
Weakest Q2: General Mills (NYSE:NYSE:GIS) Best known for its portfolio of powerhouse breakfast cereal brands, General Mills (NYSE:GIS) is a packaged foods company that has also made a mark in cereals, baking products, and snacks.
General Mills reported revenues of $4.71 billion, down 6.3% year on year, falling short of analysts' expectations by 3%. It was a weaker quarter for the company, with a miss of analysts' organic revenue growth estimates.
General Mills had the weakest performance against analyst estimates and slowest revenue growth in the group. The stock is down 6.6% since the results and currently trades at $62.79.
Simply Good Foods (NASDAQ:SMPL) Best known for its Atkins brand that was inspired by the popular diet of the same name, Simply Good Foods (NASDAQ:SMPL) is a packaged food company whose offerings help customers achieve their healthy eating or weight loss goals.
Simply Good Foods reported revenues of $334.8 million, up 3.1% year on year, falling short of analysts' expectations by 0.9%. It was an ok quarter for the company, with a decent beat of analysts' gross margin estimates.
The stock is down 1.9% since the results and currently trades at $35.47.
This content was originally published on Stock Story
