MKC.V reports second-quarter results on June 25 carrying a notable divergence: short sellers are retreating, but the cost to borrow their shares has jumped sharply — a split signal worth watching ahead of the print.
The borrow market tells the more interesting story here. Cost to borrow has climbed 49% over the past week to 9.5%, and is up 69% over the past month — the steepest rise in the data window. That acceleration comes even as short interest has collapsed, falling 18.5% on the week and more than 20% on the month to just 0.36% of the float. The combination — fewer shorts, but sharply higher borrow costs — suggests that the remaining short positions are becoming more expensive to maintain as availability tightens relative to the residual demand. Availability itself remains exceptionally loose at 6,611%, meaning there is no structural squeeze risk, but the cost spike is notable for a stock with this little short interest.
The bull and bear cases for McCormick converge on the same core question: whether the company's input-cost headwinds are easing fast enough to protect margins. Bulls point to a remarkable earnings track record — the company ranks in the 97th percentile on EPS surprise across the ORTEX universe, suggesting it has a consistent habit of beating lowered expectations. Bears focus on persistent margin pressure from food inflation, cautious consumer spending on premium seasoning products, and a stock that has slid roughly 8% year-to-date to $46.51, with a 6% drop just in the past week. The most recent earnings event in April saw the stock fall 3.6% on the day, though it recovered modestly over the following five days. The prior Q1 print in late March was harsher — the stock dropped nearly 11% on the day and held those losses through the week.
Ownership is firmly in the hands of long-only institutions. BlackRock recently added over 1.1 million shares to bring its stake to 7.9% of the company. Aristotle Capital Management built a position of 4.7% of shares in the most recent quarter — a meaningful new commitment from a value-oriented manager. That institutional accumulation stands in contrast to the weak price action, creating a tug-of-war between patient long-term holders and a market that has re-rated the stock lower on near-term earnings concerns.
The June 25 print will test whether McCormick's pricing power and supply-chain discipline are sufficient to deliver the kind of upside surprise that has characterised its recent history — or whether the margin headwinds that have weighed on the stock all year are finally showing up in the numbers.
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