Earnings more than tripled in the quarter.
One of the biggest gainers on Wednesday was Cal-Maine Foods (NASDAQ:), the largest producer of eggs in the country.
Cal-Maine stock soared about 20% on the day to an all-time high of nearly $126 per share. Cal-Maine stock is now up 22% year-to-date and 94% over the past 12 months.
The catalyst was a blowout fiscal fourth quarter earnings report, buoyed by a spike in egg prices.
Cal-Maine generated net sales of $1.1 billion in the quarter, up 71% from the same quarter a year ago. That far exceeded consensus revenue estimates of $909 million. For the full fiscal year, Cal-Maine made $4.26 billion in revenue, which was 83% higher than the previous year.
Net income more than tripled in the quarter, rising 202% to $342 million, or $7.04 per share. That crushed estimates of $6.28 per share. For the full fiscal year, Cal-Maine generated $1.22 billion in net income, or $24.95 per share, a 338% jump from the previous year.
“Our results for the fourth quarter of fiscal 2025 marked a strong finish to a challenging, but successful year of transformation for Cal-Maine Foods,” Sherman Miller, president and CEO of Cal-Maine Foods, said. “We continued to advance our growth strategy in a dynamic market environment, maintained a strong focus on safely, efficiently and sustainably managing our operations, added production capacity to meet customer demand and stayed disciplined in our investments.”
Egg Prices Soar 55%
The blowout earnings were due to rising demand for eggs, increased production to meet that demand, and significantly higher egg prices.
The company sold 311.4 million dozens of eggs in the quarter, a 9% year-over-year increase. That included a record 121.8 million dozens of specialty eggs. The higher sales were boosted by increased production capabilities, stemming from the first quarter acquisition of ISE America.
The acquisition and other efforts to boost production led to an 18% increase in the average number of layer hens during the fourth quarter. There was also a 56% increase in total chicks hatched during the fourth quarter. Looking ahead, the firm expects to add approximately 1.1 million cage-free layer hens and 250,000 pullets.
For the full fiscal year, Cal-Maine sold 1.28 billion dozen eggs, an increase of about 11% year-over-year.
In addition, the price of a dozen eggs jumped to an average of $3.31, up 55% from the same quarter a year ago. The average price for a dozen conventional eggs rose 83% in the quarter to $3.78, while the average price for specialty eggs climbed 14% to $2.56 per dozen.
The higher prices were mainly due to a reduced supply of eggs due to outbreaks of highly pathogenic avian influenza (HPAI) during a period of high demand for around the Easter holiday.
Further boosting Cal-Maine’s bottom line was a drop in feed costs to 49 cents per dozen, from 50 cents per dozen a year ago.
Acquisition to Diversify Revenue Streams
Cal-Maine finalized a major acquisition in June, buying Echo Lake Foods, a producer of prepared, frozen foods that are mostly breakfast or egg-related. Its customers include restaurants, convenience stores, frozen food manufacturers, and distributors – many of them Fortune 500 companies. Cal-Maine said the addition of Echo Lake will help it further diversify its revenue with the expansion into frozen foods.
“Looking ahead to fiscal 2026, we believe Cal-Maine Foods is well-positioned to continue delivering on our growth and returns strategy with our leading production capability, fully integrated operations, expanding product portfolio, broad distribution reach and commitment to financial discipline,” Miller said.
Cal-Maine stock has a median price target of $101 per share, which was about where it was before today’s rally. However, that is well below the current share price of $125 per share. It is likely that analysts will reevaluate their targets for the stock in the coming weeks.
Cal-Maine stock is dirt cheap, trading at just 4 times earnings. Egg prices are cyclical and there are challenges like the influenza that can seriously impact earnings. But Cal-Maine has been a steady grower over the years, with an average annualized return of 22% over the past five years and 9% over the past 10.
Given its efforts to diversify revenue and boost production, along with its low valuation, it looks like a decent option.
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