Cal-Maine Foods tumbles as EPS weighs on shares

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By Sam Boughedda 

Cal-Maine Foods (NASDAQ:CALM) posted its fiscal second quarter earnings after the close Wednesday, sending its shares tumbling in early Thursday trading.

CALM shares are down over 12% at the start of the session, trading around the $54.40 mark at the time of writing.

Despite the share price tumble, the fresh egg producer posted earnings of $4.07 per share, while revenue came in at $801.7 million, growing 110% year-over-year and beating the consensus estimate of $765 million.

"Our financial results for the quarter were boosted by a record top line performance of $801.7 million in net sales. Net income of $198.6 million for the second quarter of fiscal 2023 was another Company record," said Cal-Maine Chief Financial Officer Max Bowman.

The company said its performance during the quarter was boosted by its significantly higher selling prices, its focus on cost control, and its ability to adapt to inflationary market pressures, which led to improved profitability overall with a gross profit margin of 39.6% for the second quarter of fiscal 2023, another record for Cal-Maine Foods.

The business added that egg prices are continuing to increase in fiscal 2023 due to the effects of a further reduction in supply related to the impact of the HPAI outbreak, combined with solid demand boosted in its fiscal second quarter of 2023 by typical seasonal consumer demand.

Reacting to the report, BofA analysts told investors in a note that CALM reported an EPS of $4.07, below BofA's estimate of $4.30 and Visible Alpha Consensus of $4.21.

"Downside versus our model was driven by higher cost of goods, specifically higher outside egg purchases. We expect the EPS miss will weigh on shares given year-to-date performance in CALM's stock price and, in our view, a potential shift in seasonal egg pricing down post Christmas," wrote the analysts, who reiterated an Underperform rating and $55 price target on the stock.