A strong first-quarter fiscal 2013 performance that included
year over year earnings growth of 200% aided
Cal-Maine Foods Inc.
) to attain a Zacks #1 Rank (Strong Buy) on December 26, 2012.
The company is scheduled to report its second quarter fiscal 2013
earnings on December 31, 2012. The coming quarter is expected to
surpass expectations on the back of rising demand of shell eggs
and important strategic acquisitions of the company.
The Rank Drivers
A solid quarter, rising estimates, growing retail demand for
its specialty shell eggs and an acquisition-based growth strategy
are the rank drivers for this stock.
On October 1, Cal-Maine Foods reported fiscal first quarter
earnings of 39 cents per share, which outpaced the Zacks
Consensus Estimate of 26 cents and soared 200% from the
Cal-Maine Foods reported net sales of $272.9 million, up 12.0%
from last year thanks to higher pricing and a solid sales
performance from its premium-priced specialty shell eggs (highly
nutritious, cage-free and organic eggs). The specialty egg sales
gained from rising consumer demand and comprised 23.5% of total
shell egg sales revenue for the quarter.
In early August, Cal-Maine Foods closed the acquisition of two
egg production facilities from Pilgrim's Pride Corporation, which
have a capacity of approximately 1.4 million egg laying hens. The
acquisition, which was announced in mid July, is expected to
significantly expand the company's business mainly in the Texas
region, where the facilities are located.
Moreover, in November 2012, the company closed the acquisition
of the commercial egg production and related assets of Maxim
Production Co. Inc., including a feed mill and two production
complexes that have a capacity for approximately 3.5 million egg
laying hens located near Boling, Texas.
Earnings Estimates Rising
Over the last 90 days, the Zacks Consensus Estimate for 2013
has increased 10% to $3.06. The Zacks Consensus Estimate for
fiscal 2014 has risen almost 7% to $3.49 per share over the same
Cal-Maine Foods looks attractive at current levels. The stock
currently trades at a forward price-to-earnings (P/E) of 14.6x,
representing a discount of 29.5% to the peer group average of
20.7x. On a Price-to-book basis the stock is trading at a premium
of 29.4% to the peer group average. However, the shares trade at
a discount of 5.1% to the peer group on a price-to-sales
Based in Jackson, Mississippi, Cal-Maine Foods is the largest
producer and distributor of fresh shell eggs in the U.S. Its eggs
are marketed across the southwestern, southeastern, mid-western
and mid-Atlantic regions of the country. Its specialty shell egg
brands include Egg-Land's Best, Farmhouse and 4-Grain. The
company currently has a market cap of $1.05 billion.
CAL-MAINE FOODS (CALM): Free Stock Analysis
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