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Cal-Maine Foods, Inc. Message Board

  • netlosstoo netlosstoo Mar 10, 2013 3:36 PM Flag

    Q3, Q4 and 2014 EPS guess

    Analysts have CALM at $1.33 for Q3, 61 cents for Q4 and $3.53 for 2014
    These numbers may be a bit high. I’m guessing 90 cents for Q3, 55 cents for Q4 and $1.50 for FYE 2014.
    Q3 egg prices were better than last year and good overall, but not quite what had hoped for. Higher priced grain is going into the layers that will increase bird depreciation this Q and over the next one year laying cycle. Feed costs have been trending lower, which is a positive, guessing costs will be 54 cents per dz. this Q v. 57 cents for last Q.

    CALM is starting Q4 with USDA South Central L in the $1.05 to $1.08 range, not bad ..not great. Expect a nice Easter bump, but am concerned about a big May dip going into the summer. The reason, 290m laying hens, and they get more and more efficient each year!

    The 2014 guess seems a bit drastic .. I know… but here’s how I think 2014 plays out. Q1 will be challenging, expecting egg prices to dip into the USDA SC L 90 cent range for most of the Q, before they start increasing into the holiday season. Q1 will also have the challenge of high feed costs, which could result in a Q1 loss. Remember when Q1 losses were the norm? Feed costs will remain high through October until the new crop is harvested. I am 80% sure there will be a better crop this year and expect $5 corn going into 2014.

    Lower feed costs are good, but can lead to over production, and I do not like that layer number at 290 to start the fiscal year.

    What could change my pessimistic (short term) outlook? Protein availability. Beef numbers are down as ranchers were forced to cull a larger portion of their breeding herd, due to dry pastures and high priced hay. It will take them another year to build those numbers back up. Currently, chicken producers say they are taking demand away from beef. They point to higher priced drums and leg quarters (the cheap part of the chicken) as the consumer searches for lower priced protein.

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    • Mexico saves the day with price boosting egg buys ... might not be enough to boost Q4 to the 74 cents expected by analysts ... but can momentum keep CALM out of the red for Q1 2014? maybe ..

    • I think you were pretty accurate with your estimates. Based on the press release, approximately $0.40/share EPS is attributed to "Other Income." We'll have to wait for the 10Q to come out to see what that exactly is. I thought the stock would have sold off today, but I was dead wrong.

    • I agree, I do not think Q3 will get over $1.00 in earnings. My guess is 94 cents.

    • .... continued

      The question in my mind is … does the consumer view eggs as a lower priced protein alternative, and will they make the leap away from meats to eggs. Not sure, but the protein situation, can only help eggs and egg prices at this point.

      Longer term, I am still very bullish on CALM. They don’t have a lot of cage free and organic production, but I think they will be uniquely positioned to maximize the profits from the last of the caged hens into the 2020’s. And with that, have the capital to grow their cage free capacity. Smaller producers have not been making as much per dozen produced as CALM has this decade, and they may not be able to continue as the market will demand a large capital outlay to produce only cage free eggs (or even enriched colony, if allowed).
      Unfortunately, CALM may have to ride out another bad stretch like the late 90’s to early 2000’s, when producers woke up every morning with their heads in the toilet … puking at the thought of meeting with their bankers the next week. But a bad stretch will only make CALM stronger in the long run.

      Did I mention I don’t like the layer numbers?

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