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1. Company Snapshot

1.a. Company Description

Cal-Maine Foods, Inc., together with its subsidiaries, produces, grades, packages, markets, and distributes shell eggs.The company offers specialty shell eggs, such as nutritionally enhanced, cage free, organic, and brown eggs under the Egg-Land's Best, Land O' Lakes, Farmhouse Eggs, and 4-Grain brand names, as well as under private labels.It sells its products to various customers, including national and regional grocery store chains, club stores, independent supermarkets, foodservice distributors, and egg product consumers primarily in the southwestern, southeastern, mid-western, and mid-Atlantic regions of the United States.


Cal-Maine Foods, Inc.was founded in 1957 and is headquartered in Ridgeland, Mississippi.

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1.b. Last Insights on CALM

Cal-Maine Foods' recent performance was negatively impacted by its downbeat earnings release, which missed expectations despite strong egg sales. The company's volatile business, driven by fluctuating egg prices, has limited analyst coverage. Although Cal-Maine is shifting towards specialty eggs and prepared foods to achieve higher margins, its Q1 earnings report revealed a miss on both revenue and earnings. With a debt-free balance sheet and opportunities for M&A, the company is well-positioned for growth, but faces challenges from cyclical egg prices.

1.c. Company Highlights

2. Cal-Maine Foods' Q2 FY2026 Earnings: Navigating a Challenging Market

Cal-Maine Foods reported its second-quarter fiscal 2026 earnings, with net sales of $769.5 million, down 19.4% from the previous year. The decline was largely driven by a 28.1% decrease in total shell egg sales, resulting from 26.5% lower selling prices and 2.2% lower sales volumes. Gross profit was $207.4 million, down 41.8%, and operating income was $123.9 million, down 55.5%. Net income attributable to Cal-Maine Foods was $102.8 million, down 53.1%, with diluted earnings per share of $2.13, beating analyst estimates of $1.75.

Publication Date: Jan -08

📋 Highlights
  • Significant Sales and Profit Declines: Net sales fell 19.4% to $769.5M, with gross profit dropping 41.8% ($207.4M) and operating income plunging 55.5% ($123.9M).
  • Diversification into Specialty and Prepared Foods: Combined sales reached 46.4% of total ($770.4M), up from 31.2%, driven by 15.2 percentage point growth.
  • Expansion and Shareholder Returns: $15M invested in capacity expansion for 17M lb/year scrambled egg production; $74.8M returned to shareholders via buybacks.
  • Strong Balance Sheet: $1.1B in cash and investments, with 19.6% gross margin in prepared foods and 19% EBITDA margin guidance maintained for 2026.

Segment Performance and Diversification Efforts

The company's diversification efforts are yielding results, with specialty eggs and prepared foods combined accounting for 46.4% of net sales, up from 31.2% in the previous year. Specialty volumes were flat in Q2 due to tough comparisons, but free-range and pasture-raised eggs saw double-digit growth. The prepared foods segment reported a gross margin of 19.6%, and the company remains confident in its 19% EBITDA margin guidance for the year.

Operational Efficiency and Expansion Plans

Cal-Maine Foods has been investing in expansions, including a $15 million network optimization and capacity expansion project expected to add 17 million pounds of annual scrambled egg production. The company has also been optimizing its production, moving back to producing 90% of its sales, and expects this to grow a few percentage points. Outside purchases are used as a gap filler to address market changes.

Financial Position and Capital Allocation

The company has a strong balance sheet with $1.1 billion in cash and temporary cash investments. Cal-Maine Foods returned $74.8 million to shareholders through share repurchases and maintains a disciplined capital allocation strategy, balancing long-term value creation with a strong cash position and unlevered balance sheet.

Valuation and Outlook

With a P/E Ratio of 2.97 and an EV/EBITDA of 2.01, the company's valuation suggests that the market has already priced in the challenges it is facing. Analysts estimate next year's revenue growth at -8.4%, but Cal-Maine Foods' diversified business and strong financial position position it for long-term growth. The company's focus on execution, innovation, and selective acquisitions is expected to drive additional purchases and mitigate the impact of decreasing egg prices and volumes.

Bird Flu Concerns and Market Dynamics

The presence of bird flu remains a significant issue globally, with 26 countries reporting high-path AI in poultry and 496 outbreaks. While the number of cases has decreased, the company remains cautious, and past experiences have shown that projections for flock numbers have often been overestimated due to the influence of potential AI outbreaks.

3. NewsRoom

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Market Today: Fed Pause, Big Tech Earnings, Gold Soars

Jan -28

Source: gurufocus.com

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First Look: Amazon, UPS cuts; ASML surges; Fed in focus

Jan -28

Source: gurufocus.com

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Hussman Strategic Advisors Inc. Trims Stock Position in Cal-Maine Foods, Inc. $CALM

Jan -28

Source: defenseworld.net

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Cal-Maine Foods: Zero Debt, Massive Cash Position, And Ready For GLP-1 Tailwinds

Jan -24

Source: seekingalpha.com

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MoneyShow's Best Investment Ideas For 2026: Part 1

Jan -10

Source: seekingalpha.com

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Cal-Maine Foods: Prepared Better Than Ever For This Brutal Downcycle

Jan -09

Source: seekingalpha.com

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CX Institutional Buys New Shares in Cal-Maine Foods, Inc. $CALM

Jan -08

Source: defenseworld.net

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Why Cal-Maine Foods Stock Cracked Today

Jan -07

Source: fool.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.69%)

6. Segments

Conventional Shell Egg

Expected Growth: 4.65%

Cal-Maine Foods, Inc.'s conventional shell egg segment growth of 4.65% is driven by increasing demand for protein-rich foods, rising consumer preference for cage-free and organic eggs, and strategic acquisitions. Additionally, the company's focus on operational efficiency, cost savings, and investments in technology have contributed to the growth.

Specialty Shell Egg

Expected Growth: 4.83%

Cal-Maine Foods, Inc.'s Specialty Shell Egg segment growth of 4.83% is driven by increasing demand for premium and organic eggs, expansion in retail and foodservice channels, and strategic acquisitions. Additionally, the company's focus on sustainability, animal welfare, and quality control has enhanced its brand reputation, contributing to the segment's growth.

Egg Products

Expected Growth: 4.4%

Cal-Maine Foods' 4.4% growth in egg products is driven by increasing demand for protein-rich foods, rising popularity of egg-based breakfast options, and growing exports to countries with high egg consumption. Additionally, the company's focus on value-added products, such as egg whites and hard-boiled eggs, contributes to its growth.

Other

Expected Growth: 4.5%

Cal-Maine Foods' 4.5% growth is driven by increasing demand for specialty eggs, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on sustainability and animal welfare has led to premium pricing and higher margins. Furthermore, Cal-Maine's diversified customer base and efficient production processes have enabled the company to maintain a strong market position.

7. Detailed Products

Shell Eggs

Cal-Maine Foods, Inc. is one of the largest producers and distributors of shell eggs in the United States, offering a wide range of egg products to meet the needs of various customers.

Liquid Egg Products

The company offers a variety of liquid egg products, including whole eggs, egg whites, and egg yolks, which are used as ingredients in food manufacturing, baking, and foodservice industries.

Dried Egg Products

Cal-Maine Foods, Inc. produces dried egg products, including whole eggs, egg whites, and egg yolks, which are used as ingredients in food manufacturing, baking, and foodservice industries.

Frozen Egg Products

The company offers frozen egg products, including scrambled eggs, omelets, and other frozen egg products, which are used in foodservice industries, such as restaurants and hotels.

Egg Substitutes

Cal-Maine Foods, Inc. produces egg substitutes, which are used as alternatives to eggs in food manufacturing, baking, and foodservice industries.

8. Cal-Maine Foods, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes is low for Cal-Maine Foods, Inc. because eggs are a staple food product with limited substitutes.

Bargaining Power Of Customers

The bargaining power of customers is medium for Cal-Maine Foods, Inc. because while customers have some bargaining power due to the availability of alternative egg producers, the company's strong brand recognition and large customer base mitigate this power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low for Cal-Maine Foods, Inc. because the company is a large buyer of feed and other inputs, giving it significant bargaining power over its suppliers.

Threat Of New Entrants

The threat of new entrants is low for Cal-Maine Foods, Inc. because the egg production industry has significant barriers to entry, including high capital costs and regulatory hurdles.

Intensity Of Rivalry

The intensity of rivalry is medium for Cal-Maine Foods, Inc. because while the egg production industry is competitive, the company's strong market position and brand recognition help to mitigate the intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 0.06%
Debt Cost 3.95%
Equity Weight 99.94%
Equity Cost 3.75%
WACC 3.75%
Leverage 0.06%

11. Quality Control: Cal-Maine Foods, Inc. passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Cal-Maine Foods

A-Score: 7.5/10

Value: 8.5

Growth: 9.4

Quality: 7.8

Yield: 10.0

Momentum: 3.0

Volatility: 6.0

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CHS

A-Score: 6.7/10

Value: 6.3

Growth: 5.2

Quality: 3.6

Yield: 10.0

Momentum: 5.0

Volatility: 10.0

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Bunge

A-Score: 6.3/10

Value: 8.6

Growth: 5.6

Quality: 3.9

Yield: 6.0

Momentum: 7.0

Volatility: 7.0

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Ingredion

A-Score: 6.2/10

Value: 7.2

Growth: 6.6

Quality: 6.1

Yield: 6.0

Momentum: 1.5

Volatility: 10.0

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Laureate Education

A-Score: 6.2/10

Value: 2.9

Growth: 5.6

Quality: 6.0

Yield: 5.0

Momentum: 10.0

Volatility: 7.7

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Tyson Foods

A-Score: 5.2/10

Value: 5.5

Growth: 2.9

Quality: 3.7

Yield: 7.0

Momentum: 3.0

Volatility: 9.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

85.28$

Current Price

85.28$

Potential

-0.00%

Expected Cash-Flows