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Cal-Maine Foods Proves Its Business Model Works Even When Egg Prices Fall

MarketDash Editorial Team
1 day ago
Cal-Maine Foods stock climbed after the company beat earnings expectations despite a sharp drop in egg prices and revenue, showing how its shift toward specialty products and prepared foods is paying off.

Cal-Maine Foods, Inc. (CALM) delivered exactly the kind of quarter that makes investors reconsider their assumptions. The stock rose Wednesday after the nation's largest egg producer posted earnings that beat expectations, even though revenue and profits dropped sharply compared to last year.

The company reported second-quarter earnings per share of $2.13, topping the analyst consensus estimate of $1.94. Quarterly sales came in at $769.50 million, down 19.4% year over year and missing the Street's view of $826.395 million.

Here's what makes this interesting: egg prices fell significantly, which you'd think would be devastating for an egg company. But Cal-Maine is increasingly not just an egg company anymore.

"With lower egg prices, our increasingly diversified business model, paired with disciplined execution, proved to be a source of resilience," said Sherman Miller, president and chief executive officer.

The numbers tell the diversification story clearly. Shell egg sales fell to $649.6 million, down 28.1%. Meanwhile, prepared foods sales exploded to $71.7 million from just $10.4 million, up 586.4%.

The financial impact was still real, though. Gross profit dropped 41.8% to $207.4 million, with gross margin at 27.0%. The decline came primarily from 26.5% lower shell egg selling prices and 2.2% lower shell egg sales volume. Operating income totaled $123.9 million, down 55.5%, with an operating income margin of 16.1%.

But Miller emphasized this shift is deliberate and strategic: "We expect the ongoing sales mix shift across our portfolio, visible throughout the first half of the fiscal year, will enhance the durability and predictability of our earnings over time."

The company's balance sheet remains strong, with $1.14 billion in cash and short-term investments. Cal-Maine announced it will pay a cash dividend of approximately 72 cents per share to common stockholders, payable on February 12, pursuant to its variable dividend policy.

The company also stayed active with buybacks, repurchasing 846,037 shares for $74.8 million during the quarter under its existing $500 million authorization. That leaves $375.2 million still available for future buybacks.

Cal-Maine described its evolution as a shift from a commodity-focused egg business into a higher-value, more stable earnings platform, supported by rising demand for specialty eggs, premium offerings, hybrid pricing, and prepared foods, while its core shell-egg business remains the foundation.

Cal-Maine Foods shares were up 2.04% at $80.69 during premarket trading on Wednesday.

Back to Stock Market News

Cal-Maine Foods Proves Its Business Model Works Even When Egg Prices Fall

MarketDash Editorial Team
1 day ago
Cal-Maine Foods stock climbed after the company beat earnings expectations despite a sharp drop in egg prices and revenue, showing how its shift toward specialty products and prepared foods is paying off.

Cal-Maine Foods, Inc. (CALM) delivered exactly the kind of quarter that makes investors reconsider their assumptions. The stock rose Wednesday after the nation's largest egg producer posted earnings that beat expectations, even though revenue and profits dropped sharply compared to last year.

The company reported second-quarter earnings per share of $2.13, topping the analyst consensus estimate of $1.94. Quarterly sales came in at $769.50 million, down 19.4% year over year and missing the Street's view of $826.395 million.

Here's what makes this interesting: egg prices fell significantly, which you'd think would be devastating for an egg company. But Cal-Maine is increasingly not just an egg company anymore.

"With lower egg prices, our increasingly diversified business model, paired with disciplined execution, proved to be a source of resilience," said Sherman Miller, president and chief executive officer.

The numbers tell the diversification story clearly. Shell egg sales fell to $649.6 million, down 28.1%. Meanwhile, prepared foods sales exploded to $71.7 million from just $10.4 million, up 586.4%.

The financial impact was still real, though. Gross profit dropped 41.8% to $207.4 million, with gross margin at 27.0%. The decline came primarily from 26.5% lower shell egg selling prices and 2.2% lower shell egg sales volume. Operating income totaled $123.9 million, down 55.5%, with an operating income margin of 16.1%.

But Miller emphasized this shift is deliberate and strategic: "We expect the ongoing sales mix shift across our portfolio, visible throughout the first half of the fiscal year, will enhance the durability and predictability of our earnings over time."

The company's balance sheet remains strong, with $1.14 billion in cash and short-term investments. Cal-Maine announced it will pay a cash dividend of approximately 72 cents per share to common stockholders, payable on February 12, pursuant to its variable dividend policy.

The company also stayed active with buybacks, repurchasing 846,037 shares for $74.8 million during the quarter under its existing $500 million authorization. That leaves $375.2 million still available for future buybacks.

Cal-Maine described its evolution as a shift from a commodity-focused egg business into a higher-value, more stable earnings platform, supported by rising demand for specialty eggs, premium offerings, hybrid pricing, and prepared foods, while its core shell-egg business remains the foundation.

Cal-Maine Foods shares were up 2.04% at $80.69 during premarket trading on Wednesday.