Back to top

Analyst Blog

Zacks Equity Research

Cal-Maine Bottom line Lags in 3Q

BRFS

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Cal-Maine Foods Inc. posted third-quarter 2012 adjusted earnings of $1.09 per share, which fell short of the Zacks Consensus Estimate of $1.14 per share. Reported earnings also deteriorated from the year-ago level of $1.40. The year-over-year decline in earnings was attributable to lower profit.

Inside the Headline Numbers

Total revenue, in the quarter under review, grew 10.6% year over year to $303.7 million. The upswing resulted from strong retail demand for eggs as well as higher average selling prices. 

The largest U.S. producer and distributor of fresh-shell eggs stated that demand for eggs at the retail level remained very strong during the holidays. However, prices came down about 35% in the post-holiday period owing to slower seasonal demand and warmer weather.

Net average selling prices for shell eggs increased 3.3% year over year, and sales of specialty eggs accounted for 23.8% of shell egg revenue in the third quarter and 16.8% of total dozen eggs sold.

Specialty eggs, which have higher selling prices, continued to see improved sales and accounted for 16.8% of total dozens sold compared with 17.5% in the year-ago period.

Gross profit dipped 0.8% from the prior-year quarter to $65.1 million, mainly due to the hike in feed cost. During the quarter, feed cost climbed 11.1% to nearly 45 cents per dozen compared with the third quarter of fiscal 2012, on the back of higher corn and soybean prices. Operating income declined 10.3% year over year to $34.9 million.

Financial Position

Cal-Maine ended the quarter with cash and short-term investment of $225.7 million, long-term debt of $67.5 million and shareholders’ equity of $453.6 million.

Our Take

Jackson, Mississippi-based Cal-Maine engages in production, grading, packaging, marketing and distribution of shell eggs primarily in about 29 states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the U.S.

The company has been struggling with slower growth in earnings and margin pressure for some time. While the company turned around in second-quarter 2012, its earnings again lacked luster in the quarter under review. Feed costs continued to hurt the company’s production costs. Management predicts feed costs to remain high and volatile for the rest of the fiscal year. However, revenue growth momentum continued on strong retail demand.

Cal-Maine Foods currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. Cal-Maine faces intense competition from BRF - Brasil Foods S.A. (BRFS - Snapshot Report).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%