Cal-Maine Foods topped Wall Street's high expectations for its earnings report Tuesday afternoon. The egg producer has now posted five consecutive quarters of accelerating earnings growth with its Q1 results. CALM stock rose Wednesday morning to break out of a buy zone.
Cal-Maine is the largest egg supplier in the U.S., particularly for the Southeast. In fiscal 2022, the company sold a record 1.1 billion dozen shell eggs, up 1% from the previous year. And Cal-Maine's revenue rose 3% to $1.8 billion as the average selling price per dozen eggs rose 30% to $1.579.
Cal-Maine's production costs rose 21% in 2022 compared to 2021, primarily driven by the rising price of feed, corn and soybean meal stemming from the Russian war against Ukraine. In its most recent proxy statement filed Sept. 26, Cal-Maine says that it expects feed ingredient pricing to remain volatile, but it shouldn't have any sourcing difficulties.
The egg-production industry also dealt with an outbreak of bird flu last year. Cal-Maine says about 9.5% of its egg-laying flock was affected, compared to 11.4% in the 2014-2015 outbreak. And earlier in September, the U.S. Department of Agriculture reported 35.6 million commercial egg-laying chickens and 1.1 million young hens were depopulated from the latest outbreak. Cal-Maine says it has a "best-in-class" biosecurity program to protect its workers, food and flock.
The reduced supply sent egg prices skyrocketing, fueling booming earnings and sales growth.
Cal-Maine's fourth quarter earnings beat estimates by 22%. Its EPS jumped to $2,25 per share vs a loss of 9 cents the year prior, and revenue soared 70% to $593 million.
With egg-laying chicken populations picking up, egg prices have started to come back down.
Still, Wall Street sees Cal-Maine earnings remaining sunny-side up for the latest quarter, though investors will want to hear about guidance.
Cal-Maine Earnings
Expectations: Analysts predict Cal-Maine earnings to grow to $2.55 per share adjusted compared to a loss of 37 cents last year. Revenue is expected to balloon nearly 86% to $617 million. That would be the fifth straight quarter of accelerating sales growth.
Results: Cal-Maine's earnings rose to $2.57 per share on a quarterly record of $658.3 million in revenue, up 103% over the year.
The strong quarterly performance was driven by record average conventional selling prices and record specialty egg sales volume, Cal-Maine said. The avian influenza outbreak hiked conventional egg prices to $2.368 per dozen compared to 99 cents a year ago. While specialty egg prices rose by 12.2% to $2.10 per dozen, and comprised 34.7% of total dozens sold, compared to 27.8% in 2021.
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CALM Stock Analysis
CALM stock fell a fraction overnight but climbed roughly 1.9% to 61.70 in the first hour of trading on Wednesday. Cal-Maine's intraday high of 61.83 on Tuesday was its highest in nearly 7 years. As of Wednesday morning, Cal-Maine was out of the buy zone from a cup-with-handle base, with shares trading beyond 5% of the 57.85 buy point as indicated in MarketSmith. The buy zone goes to 60.74.
Cal-Maine stock is on the IBD 50 list. And CALM stock was featured on the IBD Screen of the Day for Monday.
The company ranks first in terms of Group Leadership for the Food-Meat Products Group, according to the IBD Stock Checkup. CALM stock has a perfect 99 Composite Rating, which combines various key technical indicators into one easy-to-read score.
The company's accelerating earnings streak have earned it a strong 79 EPS Rating. And its 98 RS Rating, out of a possible 99, indicate CALM stock has outperformed most of its peers in the S&P 500 over the past 12 months.
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