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CALM Trades at a Premium to Industry: Should You Buy the Stock?
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CalMaine Foods, Inc. (CALM - Free Report) shares are trading at a premium to the Zacks Agriculture Products industry. CALM is currently trading at a forward 12-month earnings multiple of 12.21X compared with the industry’s 11.33X.
Image Source: Zacks Investment Research
Shares of other agriculture products stocks like The Andersons (ANDE - Free Report) and West Fraser Timber Co. (WFG - Free Report) are also trading at multiples higher than the industry average.
CALM Stock: An Outperformer
The company’s stock has gained 49.1% over the past year compared with the industry’s 8.4% decline and the 2% dip witnessed by the Basic Materials sector. Meanwhile, the S&P 500 has gained 13.8%.
Image Source: Zacks Investment Research
CalMaine Offers Sector-Leading Returns
Return on equity — a profitability measure of how prudently the company is utilizing its shareholders’ funds — is 33.7%, higher than the sector’s average of 10.4% and the S&P 500’s 31.1%.
CalMaine’s return on assets is at 27.1%, ahead of the sector’s 5.2% and the S&P 500’s 8.3%, indicating that the company has been utilizing its assets efficiently to generate returns.
Optimistic Analyst Sentiment Instills Confidence in CALM
The Zacks Consensus Estimate for the company’s 2025 and 2026 earnings have moved up 82.6% and 34.4% in the past 60 days, reflecting analyst optimism.
Image Source: Zacks Investment Research
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Factors in Favor of CalMaine
High Egg Prices & Demand Drive CALM’s 1Q25 Results
CalMaine reported earnings per share of $4.47 in second-quarter fiscal 2025, a significant improvement from earnings of 35 cents in the year-ago quarter. Sales surged 82.5% to $955 million, driven by robust demand and elevated egg prices.
Egg prices have been high as supply remains constrained due to the outbreaks of highly pathogenic avian influenza (“HPAI”). In the quarter, CalMaine achieved records for the total dozen sold and the specialty dozen sold, aided by heightened demand leading up to the Thanksgiving holiday. CALM’s results also reflected the contribution from the acquisition of assets of ISE America completed in June 2024.
CalMaine’s Expansion Plans, New Products to Fuel Growth
To capitalize on the solid demand, CALM has made investments to expand operations. It has earmarked $60 million in new capital projects for the expansion of cage-free capacity. This includes $40 million in projects announced in October 2024, including the addition of five cage-free layer houses and two pullet houses across the company’s locations in Florida, Georgia, Utah and Texas. These are expected to add production capacity for 1.1 million cage-free layer hens and 250,000 pullets by late summer 2025.
CALM is also investing $15 million in expanding the egg product processing facility in Blackshear, GA, to add extended shelf-life liquid egg products. CalMaine has been remodeling the assets acquired from Tyson Foods, Inc. (TSN - Free Report) in March 2024 for shell egg production. The assets acquired from TSN were a broiler processing plant, hatchery and feed mill in Dexter, MO. CALM has been collaborating with local contract growers and has commitments for 1.2 million additional free-range hens by fall 2025.
CalMaine recently acquired certain assets of Deal-Rite Feeds, Inc. and its affiliated entities, including two feed mills, storage facilities, usable grain, vehicles, related equipment and retail feed sales business located in Statesville and Union Grove, NC. As feed is a primary cost component for the company, this move will help CALM lower production costs and drive efficiencies.
The company is also expanding its product portfolio to include value-added egg products. This is evident in its investment in Meadowcreek Foods for hard-cooked eggs and in Crepini Foods, a new venture offering egg products and prepared foods. CalMaine expects to leverage the Crepini brand of quality products, including egg wraps and protein pancakes, to extend its reach to major retailers.
Bird Flu Outbreaks Create Tailwinds for CALM Stock
Per the U.S. Department of Agriculture (USDA), HPAI outbreaks in commercial table egg layer flocks resulted in the depopulation of 30.3 million birds so far this year. However, per its report dated March 7, outbreaks have slowed over the past two weeks and have been localized.
The USDA recently rolled out a $1-billion-dollar comprehensive strategy to curb HPAI, protect the U.S. poultry industry and normalize egg prices. This strategy includes funding for biosecurity measures, financial relief for affected farmers, vaccine research, actions to reduce regulatory burdens and exploring temporary import options. This initiative builds on existing funding allocated to compensate growers for lost flocks.
Our Final Take on CALM Stock
CalMaine’s efforts to expand capacity, including cage-free and other specialty egg production, pose it for long-term growth. Efforts to diversify its product offerings will provide a distinct competitive advantage to the company. A VGM Score of B instills confidence in the stock.
Image: Bigstock
CALM Trades at a Premium to Industry: Should You Buy the Stock?
CalMaine Foods, Inc. (CALM - Free Report) shares are trading at a premium to the Zacks Agriculture Products industry. CALM is currently trading at a forward 12-month earnings multiple of 12.21X compared with the industry’s 11.33X.
Shares of other agriculture products stocks like The Andersons (ANDE - Free Report) and West Fraser Timber Co. (WFG - Free Report) are also trading at multiples higher than the industry average.
CALM Stock: An Outperformer
The company’s stock has gained 49.1% over the past year compared with the industry’s 8.4% decline and the 2% dip witnessed by the Basic Materials sector. Meanwhile, the S&P 500 has gained 13.8%.
Image Source: Zacks Investment Research
CalMaine Offers Sector-Leading Returns
Return on equity — a profitability measure of how prudently the company is utilizing its shareholders’ funds — is 33.7%, higher than the sector’s average of 10.4% and the S&P 500’s 31.1%.
CalMaine’s return on assets is at 27.1%, ahead of the sector’s 5.2% and the S&P 500’s 8.3%, indicating that the company has been utilizing its assets efficiently to generate returns.
Optimistic Analyst Sentiment Instills Confidence in CALM
The Zacks Consensus Estimate for the company’s 2025 and 2026 earnings have moved up 82.6% and 34.4% in the past 60 days, reflecting analyst optimism.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Factors in Favor of CalMaine
High Egg Prices & Demand Drive CALM’s 1Q25 Results
CalMaine reported earnings per share of $4.47 in second-quarter fiscal 2025, a significant improvement from earnings of 35 cents in the year-ago quarter. Sales surged 82.5% to $955 million, driven by robust demand and elevated egg prices.
Egg prices have been high as supply remains constrained due to the outbreaks of highly pathogenic avian influenza (“HPAI”). In the quarter, CalMaine achieved records for the total dozen sold and the specialty dozen sold, aided by heightened demand leading up to the Thanksgiving holiday. CALM’s results also reflected the contribution from the acquisition of assets of ISE America completed in June 2024.
CalMaine’s Expansion Plans, New Products to Fuel Growth
To capitalize on the solid demand, CALM has made investments to expand operations. It has earmarked $60 million in new capital projects for the expansion of cage-free capacity. This includes $40 million in projects announced in October 2024, including the addition of five cage-free layer houses and two pullet houses across the company’s locations in Florida, Georgia, Utah and Texas. These are expected to add production capacity for 1.1 million cage-free layer hens and 250,000 pullets by late summer 2025.
CALM is also investing $15 million in expanding the egg product processing facility in Blackshear, GA, to add extended shelf-life liquid egg products. CalMaine has been remodeling the assets acquired from Tyson Foods, Inc. (TSN - Free Report) in March 2024 for shell egg production. The assets acquired from TSN were a broiler processing plant, hatchery and feed mill in Dexter, MO. CALM has been collaborating with local contract growers and has commitments for 1.2 million additional free-range hens by fall 2025.
CalMaine recently acquired certain assets of Deal-Rite Feeds, Inc. and its affiliated entities, including two feed mills, storage facilities, usable grain, vehicles, related equipment and retail feed sales business located in Statesville and Union Grove, NC. As feed is a primary cost component for the company, this move will help CALM lower production costs and drive efficiencies.
The company is also expanding its product portfolio to include value-added egg products. This is evident in its investment in Meadowcreek Foods for hard-cooked eggs and in Crepini Foods, a new venture offering egg products and prepared foods. CalMaine expects to leverage the Crepini brand of quality products, including egg wraps and protein pancakes, to extend its reach to major retailers.
Bird Flu Outbreaks Create Tailwinds for CALM Stock
Per the U.S. Department of Agriculture (USDA), HPAI outbreaks in commercial table egg layer flocks resulted in the depopulation of 30.3 million birds so far this year. However, per its report dated March 7, outbreaks have slowed over the past two weeks and have been localized.
The USDA recently rolled out a $1-billion-dollar comprehensive strategy to curb HPAI, protect the U.S. poultry industry and normalize egg prices. This strategy includes funding for biosecurity measures, financial relief for affected farmers, vaccine research, actions to reduce regulatory burdens and exploring temporary import options. This initiative builds on existing funding allocated to compensate growers for lost flocks.
Our Final Take on CALM Stock
CalMaine’s efforts to expand capacity, including cage-free and other specialty egg production, pose it for long-term growth. Efforts to diversify its product offerings will provide a distinct competitive advantage to the company. A VGM Score of B instills confidence in the stock.
Despite its premium valuation, you should buy this Zacks Rank #1 (Strong Buy) stock now for better returns. You can see the complete list of today’s Zacks #1 Rank stocks here.