Cal Maine Foods Today
Effective 01/08/2025 at 04:00 PM ET
- 52 week range
- $53.38
▼
$114.06
- Dividend yield
- 3.89%
- P/E ratio
- 12.00
- Price target
- $67.00
Cal-Maine Foods Company NASDAQ: Quiet It is the largest producer and distributor of fresh eggs in the United States, and represents a compelling investment case in the current market. As a dominant player in a key defense industry, it offers a degree of stability amid economic uncertainty. Furthermore, Cal-Maine Foods is strategically positioning itself for long-term growth by embracing the expanding cage-free egg market and diversifying its product portfolio.
Maintain market dominance
While Cal-Maine Foods leads the U.S. fresh egg market, it faces competition from many smaller regional and national producers. Cal-Maine maintains its edge through an extensive distribution network and strong relationships with retailers and recognized brands such as Egg-Land’s Best and Land O’ Lakes. Its size provides economies of scale in production, purchasing, and distribution, advantages that are difficult for smaller competitors to match.
Earnings for the second quarter of fiscal year 2025 exceed expectations
Cal-Maine Foods’ earnings report for the second quarter of fiscal year 2025 (2QFY25) delivered impressive results, significantly beating analysts’ expectations. Net sales were $954.7 million, an increase of 82.5% year over year. Net income increased to $219.1 million, or $4.47 per diluted share, compared to $17.0 million, or $0.35 per diluted share, in the same period of the previous year. The company sold 329.8 million dozen eggshells, an increase of 14.4%, with the average selling price per dozen rising to $2,740 from $1,730.
Specialty egg sales were strong, contributing 36.5% of the total dozen sold and 31.7% of revenue. The company also achieved a 12.8% reduction in feed cost per dozen, to $0.483. Despite these positive results, the stock closed down 1.02% on earnings release day, likely due to a “buy the rumor, sell the news” scenario.
In after-hours action, the stock rose nearly 4%.
Cal-Maine Foods’ commitment to shareholder returns is demonstrated by its variable dividend policy, which distributes one-third of quarterly net income as dividends. For the second quarter of fiscal 2025, the company declared a dividend of approximately $1.49 per share, payable on February 13, 2025.
Focus on cage-free, value-added products
Cal-Maine Foods is actively investing in its future, with a particular focus on cage-free egg production. The company has pledged $40 million to build five new cage-free layers in multiple states, increasing its capacity by approximately 1.0 million hens by late summer 2025. Additionally, the ongoing conversion of the former Tyson Foods plant New York Stock Exchange: TSN The facilities in Dexter, Missouri, will add 1.2 million free-range chickens by fall 2025.
In order to diversify its investment portfolio, Cal-Maine acquired a 51% stake in Crepini LLC for $6.75 million, and entered the value-added market with egg-based products such as rolls, pancakes and crepes. The company is also investing $15 million to expand its facility in Blackshear, Georgia, for extended-shelf liquid egg products. These strategic moves, along with other acquisitions such as the assets of ISE (effective July 23, 2024) and Fassio Egg Farms, Inc., enable Cal-Maine to capitalize on evolving consumer preferences and market trends.
The cage-free trend: the long-term growth driver
The growing demand for cage-free eggs represents a significant growth opportunity for Cal-Maine Foods. The company’s significant investments in cage-free infrastructure demonstrate its commitment to this expanding market segment. By proactively increasing its cage-free capacity, Cal-Maine aims to secure long-term market share and capitalize on the growing demand for cage-free products.
Overcoming challenges: highly pathogenic avian influenza and feed costs
The egg industry faces inherent risks, including highly pathogenic avian influenza (HPAI) and volatile feed costs. An outbreak of highly pathogenic avian influenza virus can decimate herds, leading to production losses, as happened to Cal-Maine at its facilities in Kansas and Texas in fiscal year 2024. While those facilities are now operational, the threat remains.
For example, in calendar year 2024 alone, 38.4 million commercial laying hens and 1.8 million pullets were evacuated due to avian influenza. As of September 1, 2024, the U.S. chicken population was down approximately 4.5% from the five-year average to 307.6 million chickens.
Feed costs, especially corn and soybeans, represent a large portion of production expenses. Cal-Maine is mitigating these risks through geographic diversification of production facilities, biosecurity measures and potentially using hedging strategies to manage feed costs.
A wary look
Cal-Maine Foods stock forecast today
$67.00
-36.03% Consreduces
Based on two analyst ratings
| High expectations | $82.00 |
|---|---|
| Average expectations | $67.00 |
| Low expectations | $52.00 |
Cal Maine Food Stock Forecast Details
Despite Cal-Maine Foods’ strong performance, the current analyst consensus rating is “Reduce”, with an average 12-month price target of $67.00, indicating a potential decline from the closing price of $103.68 on January 7, 2025. This cautious outlook may be due to concerns about the stock’s valuation, especially given the inherent volatility of the egg market.
The stock saw an 89.22% year-over-year increase in the year prior to its Q2 fiscal 2025 report. Prior to the Q2 earnings release, the options market was implying a potential 5.0% move in Cal-Maine’s stock price.
Long term perspective
Cal-Maine Foods presents a compelling investment proposition, combining the stability of a leading player in the defensive industry with a forward-looking strategy focused on growth in the cage-free market and product diversification. While short-term volatility is possible due to industry-specific risks, the company’s strategic investments position it for long-term success.
The company’s commitment to innovation and adapting to consumer preferences, as demonstrated by its 2023 Sustainability Report, enhances its investment attractiveness. For investors with a long-term horizon and tolerance for the risks inherent in the egg industry, Cal-Maine Foods can be a valuable addition to a diversified investment portfolio.
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