Cal-Maine Foods (CALM) Reports Avian Influenza at Kansas Site
Cal-Maine Foods CALM reported that the highly pathogenic avian influenza (HPAI) has been detected at one of its Kansas facilities, affecting around 684,000 laying hens (equivalent to 1.6% of its total flock). The announcement has raised worries about the possibility of another avian influenza outbreak causing a surge in egg prices, thus resulting in a 9% uptick in CALM's share price.
Following the United States Department of Agriculture ("USDA") protocols, Cal-Maine Foods has temporarily ceased production at the facility. Meanwhile, it is trying to secure production from other facilities to maintain supply to its customers. The company assured that there have been no positive tests for HPAI at any of its other facilities.
According to the USDA, this incident is not a matter of immediate public health concern and is not a threat to the food supply. The eggs that are currently in the market carry no known risk associated with HPAI, and no recalls have been announced yet.
HPAI had struck egg-laying hens throughout 2022. The impact was spread across two waves, from February to June, which impacted around 30.7 million hens, and from September to December (12.6 million hens). Due to the constrained supplies, wholesale egg prices had spiked.
This was evident in Cal-Maine Foods’ fiscal 2023 (ended June 3, 2023) results, with the company reporting net sales of $3.1 billion, which marked a 77% improvement year over year. Earnings per share surged 471% year over year to $15.52 in fiscal 2023.
Conventional egg net average selling price per dozen was $2.739 for fiscal 2023, which was up 93% year over year. However, the company noted that conventional egg selling prices declined 3% year over year to $2.038 per dozen in the fourth quarter of fiscal 2023 as the egg industry began to recover from the effects of HPAI.
In the first quarter of 2024 (ended Sep 2, 2023), CalMaine Foods reported conventional egg net average selling price per dozen at $1.241, which was down 48% compared with $2.368 in the year-ago quarter. CALM witnessed a 30% year-over-year plunge in sales to $459 million in the quarter. The company had reported an exceptionally strong first-quarter 2023 sales of $658 million. Adjusted earnings per share were 2 cents in first-quarter fiscal 2024, which marked a 99% slump from the year-ago quarter.
Cal-Maine Foods continues to maintain robust biosecurity programs across all its locations, and strict protocols have been implemented to prevent the spread from the Kansas facility to other locations. In the event of a potential outbreak, the resultant impact on the egg supply could lead to increased egg prices again, potentially benefiting Cal-Maine's financial results.
Price Performance
CALM shares have declined 5.3% in the past year against the industry’s 6.2% growth.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
CalMaine currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are Axalta Coating Systems Ltd. AXTA, Universal Stainless & Alloy Products, Inc. USAP and Alamos Gold Inc. AGI. While AXTA sports a Zacks Rank #1 (Strong Buy), USAP and AGI each carry 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 44 cents per share. The consensus estimate for 2023 earnings has moved 23% north in the past 60 days. Shares of AXTA have gained 31% in a year.
Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 27 cents per share. Earnings estimates have been unchanged in the past 60 days. Shares of USAP have rallied 137% in the last year.
The consensus estimate for Alamos’ current fiscal-year earnings is pegged at 53 cents per share, indicating a year-over-year surge of 89.3%. AGI beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 25.6%. The company’s shares have surged 46% in the past year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Cal-Maine Foods, Inc. (CALM) : Free Stock Analysis Report
Universal Stainless & Alloy Products, Inc. (USAP) : Free Stock Analysis Report
Alamos Gold Inc. (AGI) : Free Stock Analysis Report
Axalta Coating Systems Ltd. (AXTA) : Free Stock Analysis Report
