CalMaine Foods, Inc. CALM announced a definitive agreement to acquire a broiler processing plant, hatchery and feed mill in Dexter, MO, from Tyson Foods, Inc. TSN. This move is in sync with CALM's growth strategy, which includes selected acquisitions, along with organic growth initiatives.
CalMaine Foods intends to repurpose the assets for the production of eggs and egg products. Initially, the egg producer will transform the broiler processing plant into an egg grading facility. The company sees potential growth with egg product processing capabilities, such as hard-cooked eggs.
Cal-Maine Foods anticipates entering arrangements with some of Tyson's former contract farmers to convert their operations to support Cal-Maine Foods' egg production operations.
This deal will help CalMaine Foods expand its geographic footprint in Missouri and surrounding markets, and enhance its ability to serve customers. The company plans to make further investments in the facilities and the community in order to create job opportunities.
The deal is expected to close in third-quarter fiscal 2024. The transaction's financial details have not been disclosed yet.
As CALM expands its market reach, it stays committed to the effective and long-term management of existing and acquired operations, as well as addressing the demands of its customers.
The company reported adjusted earnings of 2 cents per share in first-quarter fiscal 2024 (ended Sep 2, 2023), faring better than the Zacks Consensus Estimate of a loss of a penny. The bottom line, however, marked a 99% slump from the prior-year quarter, mainly dragged down by lower conventional shell egg prices, increased labor and other input costs.
Sales plunged 30% year over year to $459 million in the first quarter of fiscal 2024. The company had reported exceptionally strong first-quarter 2023 sales of $658 million.
Price Performance
CALM shares have gained 12.6% in the past year compared with the industry’s 12.6% growth.
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Zacks Rank & Stocks to Consider
CalMaine currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the basic materials space are Axalta Coating Systems Ltd. AXTA and Hawkins, Inc. HWKN. AXTA sports a Zacks Rank #1 (Strong Buy) and HWKN carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Axalta Coating’s 2023 earnings is pegged at $1.58 per share, suggesting year-over-year growth of 6.8%. The consensus estimate for 2023 earnings has moved 8.2% north in the past 60 days. AXTA shares have gained 32.5% in a year.
The consensus estimate for Hawkins’ current fiscal year’s earnings is pegged at $3.46, indicating a year-over-year rise of 20.9%. HWKN has a trailing four-quarter average surprise of 27.4%. The company’s shares have gained 86.5% in the past year.
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