• Tue. Dec 5th, 2023

Time to Buy Cal-Maine Foods (CALM) Stock After Strong Earnings?


Mar 31, 2023
Voya Financial (VOYA) Q3 Earnings and Revenues Top Estimates

High egg prices have been very beneficial to Cal-Maine Foods CALM as the largest producer and distributor of shell eggs in the United States.

Cal-Maine stock has rallied after crushing its fiscal third-quarter earnings expectations on Tuesday. Let’s see if investors should buy into the rally with shares of CALM up 9% following the stellar Q3 results.

Q3 Review

Cal-Maine was expected to have a strong quarter with the average cost of a dozen eggs still over $4 according to the latest CPI numbers. Still, Cal-Maine’s bottom line was more impressive than many analysts imagined beating EPS estimates by 30% at $6.62 compared to expectations of $5.09 per share.

Year over year, third-quarter earnings were up a staggering 717% with EPS at $0.81 in Q3 2022. On the top line, sales more than doubled to $997.5 million from $447.5 million in the prior year quarter.

Along with high inflation, the HPAI epidemic (Bird Flu) continued to cause a shortage in egg supplies during the quarter. While Cal-Maine has been able to benefit from the supply shortage investors will want to monitor the company’s growth as this operating environment has been challenging despite the company’s recent success.

Image Source: Zacks Investment Research

Earnings Outlook

According to Zacks estimates Cal-Maines earnings are now forecasted to soar 499% this year at $16.30 per share compared to EPS of $2.72 in 2022. Fiscal 2024 earnings are projected to drop -67% to $5.28 per share following what will be a very tough to compete against year.

Earnings estatmite revisions have remained much higher throughout the quarter but have slightly declined over the last 30 days although this may change as analyst digest Cal-Maine’s Q3 results.

Zacks Investment Research
Image Source: Zacks Investment Research

Performance & Valuation

Year to date, Cal-Maine stock is up +9% to beat the S&P 500’s +5%, the Agriculture-Products Markets -1%, and fellow industry giant Bunge Limited’s (BG) -4%. More Impressive, shares of CALM are now up +54% over the last two years to largely outperform the benchmark, Bunge Limited, and its Zacks Subindustyr’s -2%.

Zacks Investment Research
Image Source: Zacks Investment Research

Trading around $59 per share and 9% from its 52-week highs Cal-Maine stock trades at just 3.5X forward earnings. This is nicely beneath its industry average of 10.7X and the S&P 500’s 18.5X.

Even better, shares of CALM trade well below their decade high of 258.8X and at an 87% discount to the median of 29.3X.


Cal-Maine Foods stock certainly looks undervalued based on its earnings outlook and P/E valuation. However, the market is forward-looking and tends to price in upcoming factors such as the plausibility that egg prices will not remain this high as inflation begins to ease and that supply will be restored once the HPAI epidemic subsides.

To that point, Cal-Maine Foods stock lands a Zacks Rank #3 (Hold). While there could certainly be more upside in shares of CALM there may also be better buying opportunities after the most recent rally.  

Is THIS the Ultimate New Clean Energy Source? (4 Ways to Profit)

The world is increasingly focused on eliminating fossil fuels and ramping up use of renewable, clean energy sources. Hydrogen fuel cells, powered by the most abundant substance in the universe, could provide an unlimited amount of ultra-clean energy for multiple industries. 

Our urgent special report reveals 4 hydrogen stocks primed for big gains – plus our other top clean energy stocks.  

See Stocks Now

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Cal-Maine Foods, Inc. (CALM) : Free Stock Analysis Report

Bunge Limited (BG) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Image and article originally from www.nasdaq.com. Read the original article here.