A day after posting solid fiscal first-quarter results,
Cal-Maine Foods, Inc.
) reached a new 52-week high and became a Zacks #1 Rank (Strong
Buy). The results included an earnings surprise of 50.0% during a
quarter that is generally the toughest for this largest national
producer of fresh shell eggs.
In addition to its performance, the stock is being driven by
growing retail demand for its specialty shell eggs, an
acquisition-based growth strategy and an attractive valuation.
Solid First Quarter Beat
On October 1, Cal-Maine Foods reported fiscal first quarter
earnings of 39 cents per share, which beat the Zacks Consensus
Estimate of 26 cents and soared 200% from the prior-year quarter.
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 on two egg
production facilities from Pilgrim's Pride Corporation, which have
a capacity for 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.
Earnings Momentum on the Rise
Over the last 7 days, the Zacks Consensus Estimate for fiscal 2013
has gone up by 11.9% to $3.11, reflecting year-over-year growth of
18.3%. For fiscal 2014, the Zacks Consensus Estimate is at $3.27,
reflecting a year-over-year growth rate of 5.1%.
Cal-Maine Foods looks attractive at current levels. The stock
currently trades at a forward price-to-earnings (P/E) of 14.99x,
representing a discount of 20.7% to the peer group average of
18.90x. Shares trade almost in line with the peer group on a
price-to-sales and price-to-book basis. Furthermore, the stock has
a trailing 12-month return on equity (ROE) of 14.1%, which is above
the peer group average of 9.9%.
Chart Showing Consistent Rise
Shares of Cal-Maine have been rising consistently since announcing
the Pilgrim's Pride acquisition. It reached a new 52-week high of
$46.62 on October 2, a day after announcing solid first quarter
results. Moreover, the stock is currently trading above its 50- and
200-day moving averages, which stand at $40.17 and $37.70,
respectively. In fact, the stock has been consistently trading
above its 50-day and 200-day moving averages since the end of July
Volume is strong, averaging roughly 125K daily. The year-to-date
return for the stock is 26.21% compared with the S&P 500's
return of 14.96%.
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 $1.09 billion.
Want More of Our Best Recommendations?
Zacks' Executive VP, Steve Reitmeister, knows when key trades are
about to be triggered and which of our experts has the hottest
hand. Then each week he hand-selects the most compelling trades and
serves them up to you in a new program called
CAL-MAINE FOODS (CALM): Free Stock Analysis
To read this article on Zacks.com click here.