S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Strange Money Secret Used by the Ultra-Wealthy (Ad)
Applied Materials stock is Ray Dalio's favorite in this new cycle
Palo Alto Networks aims at cyber security leadership
BREAKING: Tiny biotech successfully treats blindness (Ad)
Spotify sounding better to analysts as company tunes into profits
3 Reasons the Capital One-Discover merger is a big deal
Better Than Oil Stocks (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Bears covered shorts on this ETF, 3 stocks to pop on the shift
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Strange Money Secret Used by the Ultra-Wealthy (Ad)
Applied Materials stock is Ray Dalio's favorite in this new cycle
Palo Alto Networks aims at cyber security leadership
BREAKING: Tiny biotech successfully treats blindness (Ad)
Spotify sounding better to analysts as company tunes into profits
3 Reasons the Capital One-Discover merger is a big deal
Better Than Oil Stocks (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Bears covered shorts on this ETF, 3 stocks to pop on the shift
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Strange Money Secret Used by the Ultra-Wealthy (Ad)
Applied Materials stock is Ray Dalio's favorite in this new cycle
Palo Alto Networks aims at cyber security leadership
BREAKING: Tiny biotech successfully treats blindness (Ad)
Spotify sounding better to analysts as company tunes into profits
3 Reasons the Capital One-Discover merger is a big deal
Better Than Oil Stocks (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Bears covered shorts on this ETF, 3 stocks to pop on the shift
S&P 500   4,981.80
DOW   38,612.24
QQQ   425.61
Palo Alto Networks, Keysight fall; Garmin, Toll Brothers rise, Wednesday, 2/21/2024
Strange Money Secret Used by the Ultra-Wealthy (Ad)
Applied Materials stock is Ray Dalio's favorite in this new cycle
Palo Alto Networks aims at cyber security leadership
BREAKING: Tiny biotech successfully treats blindness (Ad)
Spotify sounding better to analysts as company tunes into profits
3 Reasons the Capital One-Discover merger is a big deal
Better Than Oil Stocks (Ad)
How major US stock indexes fared Wednesday, 2/21/2024
Bears covered shorts on this ETF, 3 stocks to pop on the shift

Cal-Maine Brings Calm To The Market

Cal-Maine Brings Calm To The Market

Cal-Maine’s Dividend Outlook Brightens

We weren't expecting great results from Cal-Maine NASDAQ: CALM in the calendar third quarter, fiscal first, and we were partly right. The company posted a loss as expected but it was much less than forecast which is good news for those expecting a dividend. Cal-Maine is a high-quality, if erratic, payer of dividends whose policy states that no payment can be made when there is a quarterly loss on the books or even until that loss is made up. That’s how they maintain the fortress balance sheet. What this means for investors is that a dividend is not expected to be issued this quarter or even the next but the fundamental picture is improving and a dividend could come early in 2022. Until then, The company will continue to invest in itself and grow.

Cal-Maine Beats The Consensus Estimate

Cal-Maine reported $331.70 million in net consolidated revenue for a gain of 13.3% over last year and 37.5% over 2019. The revenue beat the consensus by $13.3 million or 420 basis points on what we view as mixed fundamentals. The company says the volume of eggs delivered fell by 1.7% as stay-at-home tailwinds diminish and food-away-from-home business begins to pick up. That decline was offset by a $0.16 per dozen or 14.8% increase in the average selling price that we expect to persist into the current quarter at least. The average selling price is up on the combination of industry fundamentals and the company's ongoing shift to the specialty egg Market.


Specialty eggs include cage-free, hormone-free, and any other egg labeled other than “eggs” and those all come with a higher margin. Sales of specialty eggs accelerated 290 basis points to 28.9% of sales on a volume basis and accounted for 43% of the revenue. The bad news is that higher farm costs cut deeply into the gross margins on all types of eggs. The gross margin of 2.0% is down 370 basis points due to a  25% increase in farm costs that were driven by a 40% increase in feed cost. Because both farm and feed costs are being impacted by supply chain shortages and shipping constraints we think margin pressure will persist.  

Regardless, on the bottom line, the company reported -$0.37 to beat the consensus by $0.25 putting the net amount to be recovered before dividend payments at $0.46 per share. The company doesn't give any guidance but the analysts are expecting a consensus of $0.16 per share in earnings for the next quarter so it is very possible Cal-Maine will be back in a dividend-paying position in the second half of the fiscal year.

A Short-Covering Rally Is In Store For Cal-Maine

The Marketbeat.com data shows Cal-Maine is carrying a significantly high short interest that could and probably will help sustain higher share prices in the near to mid-term. At over 12% and more than 15 days-to-cover at the average trading volume, a move above the $37 level could spark a short squeeze as well.  Shares of Cal-Maine are trading just shy of that level in early premarket action but could easily cross it during the day. The stock appears to be forming a Head-and-Shoulders reversal that, if confirmed, could easily take the stock back up to the $37 level within a few days to a week. Longer-term, we are expecting the fundamental picture to shift into Cal-Maine’s favor in the calendar fourth quarter and drive profitability above expectation.

Cal-Maine Brings Calm To The Market

→ Watch for your Federal QR code (From Stansberry Research) (Ad)

Should you invest $1,000 in Cal-Maine Foods right now?

Before you consider Cal-Maine Foods, you'll want to hear this.

MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Cal-Maine Foods wasn't on the list.

While Cal-Maine Foods currently has a "Hold" rating among analysts, top-rated analysts believe these five stocks are better buys.

View The Five Stocks Here

10 Best Stocks to Own in 2024 Cover

Click the link below and we'll send you MarketBeat's list of the 10 best stocks to own in 2024 and why they should be in your portfolio.

Get This Free Report

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Cal-Maine Foods (CALM)
2.9805 of 5 stars
$57.30-1.8%0.80%6.19Hold$45.00
Compare These Stocks  Add These Stocks to My Watchlist 

Thomas Hughes

About Thomas Hughes

  • tmhughes.writeon@gmail.com

Contributing Author

Technical and Fundamental Analysis

Experience

Thomas Hughes has been a contributing writer for MarketBeat since 2019.

Areas of Expertise

Technical analysis, the S&P 500; retail, consumer, consumer staples, dividends, high-yield, small caps, technology, economic data, oil, cryptocurrencies

Education

Associate of Arts in Culinary Technology

Past Experience

Market watcher, trader and investor for numerous websites. Founded Passive Market Intelligence LLC to provide market research insights. 


Featured Articles and Offers

Search Headlines: