Food manufacturer Cal-Maine Foods surpassed Wall Street forecasts
Cal-Maine Foods Inc. (CALM), one of the largest suppliers of fresh chicken eggs in the United States, announced the results of the fourth quarter of the fiscal year 2022 on Tuesday, August 19. Investors, given the double-digit revenue growth in the past quarter, expected a repeat of solid performance, and the company significantly exceeded forecasts. In recent months, Cal-Maine Foods shares have been showing a trend opposite to the general state of the most significant indices.
In comparison, beginning of the year, the company’s shares had risen by more than 40%, S&P 500 lost more than 18%. Cal-Maine Foods’ revenue in the fourth quarter (the company itself called it a record) amounted to $593 million, which is almost 70% more year-on-year. Earnings reached $110 million, or $2.25 per share, in the same quarter a year earlier, the company lost $0.09 per share. According to management, sales growth by a shortage of fresh eggs in the United States amid an outbreak of avian influenza on some farms also caused an increase in the average selling price of fresh eggs.
The fourth quarter’s results were significantly higher than predicted on Wall Street, assuming that Cal-Maine Foods’ profit would be about $1.84 per share and revenue would not exceed $576 million should note that last year the prices of fresh eggs decreased slightly;
Still, this year they increased again due to the abovementioned reasons and high fuel, feed, and labor costs. In summary, Cal-Maine Foods deals with a relatively simple comparison with last year. Of course, problems with supply chains also affect the company, but so far, it has shown the ability to manage its expenses competently. Another driver is the growing demand for special eggs – obtained from free-range laying hens and organic ones.
The volume of sales of ordinary eggs in the last quarter decreased by 4.8% year-on-year, while the volume of special eggs increased by 16.7%. The growing demand for special eggs is beneficial to Cal-Maine Foods, as such products are more profitable than regular eggs. The management of Cal-Maine Foods positively assessed the past quarter and the entire 2022 fiscal year and noted that it has sufficient funds to invest in expansion. In addition, the company announced a quarterly dividend of $0.75 per share.
