What Happened?
Shares of egg company Cal-Maine Foods (NASDAQ: CALM) jumped 18.2% in the afternoon session after the company reported fiscal fourth-quarter results that flew past analyst expectations, driven by higher egg prices and sales volumes.
The company announced fiscal fourth-quarter earnings per share of $7.04 on revenue of $1.1 billion. These results significantly beat analyst forecasts, which had anticipated earnings of $6.28 per share. The strong performance was fueled by a 54.9% jump in the average selling price for a dozen eggs compared to the prior year. Cal-Maine attributed the higher prices to a reduced national egg supply caused by outbreaks of highly pathogenic avian influenza (HPAI), also known as bird flu, which coincided with high demand around the Easter holiday. Sales volumes also increased, with the company selling 311.4 million dozen eggs, up from 285.6 million in the same quarter last year. The company also noted that feed costs per dozen were down 2.2% from a year ago, which helped profitability.
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What Is The Market Telling Us
Cal-Maine’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. But moves this big are rare even for Cal-Maine and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock gained 6.4% on the news that the company reported strong fourth-quarter results, which blew past analysts' revenue and EPS estimates.
The top line benefited from a strong demand for shell eggs. The company also gained from improved pricing, given supply constraints caused by recent outbreaks of highly pathogenic avian influenza. Given the favorable demand dynamics, the company highlighted plans to expand its production capacity by adding approximately 1.1 million cage-free layer hens and 250,000 pullets by late summer 2025. Zooming out, we think this was a good quarter with some key areas of upside.
Cal-Maine is up 15.6% since the beginning of the year, and at $122.14 per share, has set a new 52-week high. Investors who bought $1,000 worth of Cal-Maine’s shares 5 years ago would now be looking at an investment worth $2,780.
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