Key points
- Cal-Maine Foods is the nation’s largest producer and marketer of fresh eggs, with an estimated 19 percent market share.
- Cal-Maine reported fiscal third-quarter 2024 earnings per share that were 55 cents higher despite revenue falling 29.5% due to avian flu disruptions in the egg supply.
- Cal-Maine stock trades at just 13.6 times forward earnings with a $1.00 special dividend payable on May 16, 2024, to shareholders of record as of May 1, 2024.
- 5 stocks we like better than Cal-Maine Foods
Cal-Maine Foods Inc. NASDAQ: CALM is the largest and leading producer and distributor of fresh shell eggs in the United States, with a 19% market share. Shareholders rejoice in the strong fiscal 2024 third quarter earnings report and $1.00 special dividend. The company has mounted a solid turnaround despite falling egg prices and growing concerns over highly pathogenic avian influenza (HPAI).
Demand remained as strong as ever, as evidenced by blockbuster earnings data. Despite record volumes, basic materials sector stocks are still in value investing territory, with shares trading at just 11.15 times earnings and 13.59 times forward earnings. Compete with Post Holdings Inc. NYSE:POST as one of the largest foodservice providers of egg products.
Impacts of avian influenza
Concerns about avian influenza (h5n1) have made headlines, with farm livestock and livestock becoming infected and even human infections becoming a reality. The USDA reported that nearly 15.7 million commercial laying hens and pullets were depopulated (terminated) between November 2023 and January 2024. Cal-Maine suffered an outbreak at its facility in Kansas, resulting in depopulation of 1, 5 million laying hens and 240,000 pullets.
On April 2, 2024, the company reported positive test results for avian influenza at its Parmer County, Texas facility, resulting in the depopulation of 1.6 million laying hens (adult female chickens) and 337,000 pullets ( female chickens less than 1 year old) or 3.6% of its total flock. Production at the plant has been temporarily suspended.
Cal-Maine has been hit by the significant reduction in egg supply. Considering that recent epidemics have caused a surge in market prices, the overall impact is still considered not serious, according to the company. Check the heat map of the sector on MarketBeat.
Growing brand portfolio
The company continued to acquire farms such as Fassio Egg Farms and a closed broiler processing plant, hatchery and feed mill. Tyson Foods Inc. New York Stock Exchange: TSN to help meet the high demand. While you may not have seen Cal-Maine’s namesake brand eggs at your local grocery store, you’ve most likely purchased eggs under their portfolio of brands. They include Farmhouse, 4-Grain, Egg-Land’s Best, Sunny Meadows and Land O’Lakes.
Daily mug and handle breakout
The daily candlestick chart on CALM illustrates a cup and handle breakout pattern. The cupped lip line formed at the double top at $58.31 on April 4, 2023. Shares sold as low as a swing low of $42.16 on October 4, 2023, before staging a rally towards the line of the cupped lip, peaking at $57.83. CALM fell to $52.91 on January 4, 2024, to set the stage for the handle formation as the stock twice attempted to break the cup lip line, finally reaching a new high high at $64.76. The daily relative strength index (RSI) is testing the 70 band during its recent rebound. The pullback support levels are at $58.31, $55.11, $50.23, and $48.06.
EPS Beat and Special Dividends Citing Eggs
On April 2, 2024, Cal-Maine reported EPS of $3.00, beating consensus estimates of $2.45 by 55 cents. Revenue fell 29.5% year-over-year to $703.08 million, beating consensus estimates of $692.35 million. The Company will pay a special dividend of $1.00 for holding its Class A common stock, payable on May 16, 2024, to holders of record on or after May 1, 2024.
CEO Insights
Cal-Maine CEO Max Bowman noted that its fiscal third-quarter 2024 sales of $703.1 million were up against a stark comparison of $997.5 million in the one-year period ago, which was the company’s highest quarterly sales period with record average selling prices for specialty and conventional eggs. . The drop in sales was the result of a significant drop in supplies due to avian influenza. As a result, market prices increased. Overall volume increased 3.2% to 300.9 million dozen.
Conventional eggs sold grew 2.6% to 192.2 million dozen, while specialty eggs increased 4.4% year over year to 108.6 million dozen sold. The average net selling price per dozen of conventional eggs fell 40% to $2,152 from $3,678 in the year-ago period. Prices for specialty eggs fell from $2,616 a dozen, down 36.1%, to $2,415 a dozen.
Bowman commented: “Demand for shell eggs has remained strong as consumers seek a convenient and nutritious protein option. Across all our businesses, we are focused on meeting this demand as we continue to identify opportunities to extend our market reach “.
Bowman concluded: “We have a strong balance sheet that gives us the flexibility to fund our growth initiatives, including potential acquisitions. We believe fiscal 2024 will be another successful year for the Company and we look forward to future opportunities for Cal-Maine Foods.”
Cal-Maine analyst ratings and price targets I’m on MarketBeat. The titles of Cal-Maine contestants and contestants can be found with MarketBeat Stock Screener.
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