Cal-Maine Foods is Friday's IBD Stock Of The Day, as the largest egg producer in the U.S. continues to record strong growth even as a bird flu outbreak has decimated chicken flocks in 2022. CALM shares edged lower Friday.
Cal-Maine stock competitors include Mexico-based Industrias Bachoco, VitalFarms and Pilgrim's Pride.
After just scraping by during the pandemic's early years, the Mississippi-based egg producer and supplier sold a record 1.1 billion dozen shell eggs in fiscal 2022, up 1% from the previous year. Cal-Maine's revenue surged 30% to $1.8 billion for the year, in line with the rise in average selling price per dozen eggs.
However, the company's production costs rose 21% in 2022 compared to 2021, primarily driven by the rising price of feed, corn and soybean meal stemming from the Russian war against Ukraine.
The egg-production industry has also been dealing with an outbreak of bird flu throughout 2022. The avian influenza has spread through chicken and turkey flocks in 46 states since it was first detected in Indiana on Feb. 8.
The bird flu outbreak has been responsible for nearly 53 million chicken deaths, according to the U.S. Department of Agriculture, with some animals falling sick while other flocks have been culled.
In fiscal year 2022, Cal-Maine reported that about 9.5% of its egg-laying flock was affected, compared to 11.4% during the 2014-2015 outbreak.
The reduced supply has sent egg prices skyrocketing, fueling a recovery in earnings and sales growth, according to analysts.
Cal-Maine Stock
Cal-Maine stock dropped 1.5% to 58.20 during Friday's market trading. Volume was down 70% Friday and the stock was down more than 1% on the week. Shares are in a consolidation, showing a 62.74 buy point, according to MarketSmith analysis.
However, 60.11, 10 cents above short-term highs on Dec. 7, could be used as an early entry for aggressive investors. This early entry for Cal-Maine stock is near a trendline and not too far from the 21-day and 50-day moving averages.
Cal-Maine's Q4 earnings jumped to $2.25 per share vs a loss of 9 cents the year prior, and revenue soared 70% to $593 million.
On Sept. 27, the Mississippi-based egg producer reported first-quarter fiscal 2023 results, topping Wall Street's high earnings expectations. The company has posted five consecutive quarters of accelerating earnings growth.
The company will report Q2 2023 earnings in late December. Analysts expect profits to soar to $2.70 per share, up from 2 cents a year ago. Wall Street forecasts revenue increasing 76% to $690 million.
Cal-Maine stock holds IBD's highest ranking in the Foods-Meat Products industry group. CALM shares have a Composite Rating of 96. Its Relative Strength Rating is 96, an exclusive IBD Stock Checkup gauge for share price movement, with a 1 to 99 score. The EPS Rating is 78.
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