For investors with a long-term horizon, examining earnings trend over time and against industry peers is more insightful than looking at an earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on Cal-Maine Foods Inc (NASDAQ:CALM) useful as an attempt to give more color around how Cal-Maine Foods is currently performing. See our latest analysis for Cal-Maine Foods
How Well Did CALM Perform?
I use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to analyze different companies on a similar basis, using the latest information. For Cal-Maine Foods, the most recent bottom-line -$59.3M, which, against the prior year’s figure, has turned from positive to negative. Given that these figures may be relatively short-term, I’ve estimated an annualized five-year value for Cal-Maine Foods’s earnings, which stands at $106.6M.
Additionally, we can examine Cal-Maine Foods’s loss by researching what has been happening in the industry on top of within the company. Firstly, I want to briefly look into the line items. Revenue growth over the past couple of years has risen by a mere 6.07%. Given that top-line growth is also pretty flat, the key to profitability moving forward would be managing cost growth rates. Inspecting growth from a sector-level, the US food industry has been growing, albeit, at a subdued single-digit rate of 5.42% in the previous twelve months, and 7.52% over the previous few years. This means that whatever uplift the industry is deriving benefit from, Cal-Maine Foods has not been able to gain as much as its industry peers.
What does this mean?
Cal-Maine Foods’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. With companies that are currently loss-making, it is always hard to forecast what will occur going forward, and when. The most insightful step is to examine company-specific issues Cal-Maine Foods may be facing and whether management guidance has consistently been met in the past. I suggest you continue to research Cal-Maine Foods to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for CALM’s future growth? Take a look at our free research report of analyst consensus for CALM’s outlook.
2. Financial Health: Is CALM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.