What Happened?

Shares of food and beverage supplier MGP Ingredients (NASDAQ:MGPI) fell 26.1% in the afternoon session after the company provided weak preliminary guidance ahead of its third-quarter earnings, with revenue and adjusted EBITDA falling below Wall Street's estimates. The weak results were driven by soft trends in the alcohol spirits category and elevated industry-wide whiskey inventories. Moving on, management expects these industry headwinds to persist at least through the rest of the year.

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What The Market Is Telling Us

MGP Ingredients’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. Moves this big are rare for MGP Ingredients and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 8 months ago when the stock dropped 17.4% on the news that the company reported fourth-quarter results and provided full-year revenue guidance that fell below analysts' expectations. The weak guidance likely reflected uncertainty regarding the macro picture, with the company highlighting several industry headwinds.

Management added that "we continue to monitor the potential impact of inventory levels at distributors, overall American whiskey supply and consumption patterns, and inflation on consumers."

On the other hand, MGP Ingredients blew past analysts' EPS expectations during the quarter. Its revenue also outperformed Wall Street's estimates. In particular, the company's premium branded spirits portfolio grew by an astonishing 50% year on year. Overall, it was a mixed quarter, with the market likely worried about the weak guidance.

MGP Ingredients is down 38.6% since the beginning of the year, and at $60.24 per share, it is trading 40.5% below its 52-week high of $101.30 from December 2023. Investors who bought $1,000 worth of MGP Ingredients’s shares 5 years ago would now be looking at an investment worth $1,301.

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