Cal-Maine Foods, the largest egg producer in the U.S., topped third-quarter earnings views Tuesday, reporting booming profits as a bird flu outbreak decimated chicken flocks and kept egg prices inflated across the country. CALM shares edged down during market trade Tuesday but surged Wednesday.
The Mississippi-based egg producer and supplier has now posted six straight quarters of accelerating earnings growth. CEO Sherman Miller told investors Tuesday the company's Q3 earnings performance reflects increased average selling prices for conventional eggs and strong customer demand.
CALM stock spiked 6.7% to 57.92 Wednesday during market trade with volume up 290%. Ahead of earnings Tuesday, the stock dropped 1.8% to 54.27.
After just scraping by during the pandemic's early years, Cal-Maine sold a record 1.1 billion dozen shell eggs in fiscal 2022, up 1% from the previous year. Cal-Maine's revenue surged 30% to $1.8 billion for the year, in line with the rise in average selling price per dozen eggs.
Cal-Maine Earnings
Estimates: Analysts expected Cal-Maine earnings to skyrocket 575% to $5.47 per share in Q3. Wall Street forecast sales growing 86% to $888 million. Analysts projected Cal-Maine's average selling price will be $3.17 per dozen eggs.
Results: Cal-Maine earnings ballooned 717% to $6.62 per share, driven by strong conventional egg prices in Q3. Sales grew 109% to $997.5 million, driven by strong conventional egg prices.
The company reported its average selling price for conventional eggs in Q3 was $3.678 per dozen, up 152% compared to last year. Meanwhile, the average selling price for specialty eggs rose to $2.616 per dozen, compared with $1.923 per dozen in Q3 2022.
The company said increased demand for specialty eggs came as conventional egg prices spiked higher. Average conventional egg prices exceeding specialty egg prices has occurred for the past four quarters but is" atypical historically," according to Cal-Maine.
"Elevated market pricing continues, primarily due to the impact of the ongoing epidemic of highly pathogenic avian influenza," Sherman said in a news release.
Sherman added the bird flu outbreak has increased costs and created supply chain disruptions. However, Cal-Maine reported Tuesday there have been no positive tests for avian flu at any of the company owned or contracted production facility as of March 28, 2023.
In fiscal year 2022, Cal-Maine reported that about 9.5% of its egg-laying flock was affected, compared with 11.4% during the 2014-15 outbreak.
Bird Flu And Egg Prices
Retail egg prices decreased 6.7% in February 2023 but were still 55.4% above February 2022 prices, according to the latest consumer price index. The ongoing outbreak of avian flu has contributed to elevated egg prices, according to the U.S. Department of Agriculture.
The USDA predicts egg prices will increase 29.6% in 2023. Last week, the national average price was $4.96 per dozen eggs, up 96% vs. the prior week, according to USDA data. This is the highest average price so far in 2023.
The egg production industry dealt with a major bird flu outbreak throughout 2022. The avian influenza has spread through chicken and turkey flocks in 47 states since it was first detected in Indiana on Feb. 8, 2022.
As of March 22, more than 58 million birds have been affected by the outbreak, according to the Centers for Disease Control and Prevention, with some animals falling sick while other flocks have been culled.
Cal-Maine stock is second in IBD's Foods-Meat Products industry group. CALM stock has an 80 Composite Rating. Its Relative Strength Rating is 38, an exclusive IBD Stock Checkup gauge for share price movement. The EPS Rating is 78.
Futures Rise; 10 Stocks Flash Buy Signals
CALM Stock
Cal-Maine stock are set to reclaim the 200-day and 50-day moving averages on Wednesday. Shares have a 65.42 buy point, according to MarketSmith analysis.
On Sept. 27, the egg producer reported first-quarter fiscal 2023 results that topped Wall Street's high earnings expectations. Cal-Maine followed that up with mixed Q2 results in late December. The company reported earnings per share of $4.07 vs. views of $4.24. Revenue came in at $802 million, topping expectations of $797 million.
CALM stock hit a record-high 65.32 intraday on Dec. 27, then plunged 14.5% on Dec. 29 following Cal-Maine's Q2 results.
Ahead of Tuesday earnings, analysts predicted record profits for Cal-Maine in 2023, with full-year earnings per share of $15.09. That would represent growth of 455% vs. 2022 and a 131% increase vs. its record EPS of $6.53 in 2016.
But investors expect Cal-Maine earnings to plunge in fiscal 2024 as industry production recovers, which will impact prices.
Cal-Maine competitors include Mexico-based Industrias Bachoco, VitalFarms and Pilgrim's Pride.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
