The egg producer delivered a better-than-feared quarter.
Shares of Cal-Maine Meals (CALM 3.62%) climbed as excessive as 7.2% early Wednesday, then settled to shut up 3.6% after the egg producer introduced better-than-expected quarterly outcomes. This occurred regardless of information of a brand new Avian flu outbreak at one in all its amenities.
Cal-Maine Meals’ better-than-feared quarter
For its fiscal third quarter ended March 2, 2024, Cal-Maine Meals’ income declined 29.5% yr over yr to $703.1 million, translating to internet earnings of $146.7 million, or $3 per share (down from $6.62 per share in the identical year-ago interval). Analysts, on common, have been solely modeling earnings of $2.46 per share on income nearer to $692 million.
Delving deeper into its outcomes, the corporate’s income decline was pushed fully by decrease common promoting costs. In final yr’s fiscal Q3, shell egg costs stood at file highs, as a consequence of a mix of provide chain challenges and the influence of a number of avian flu outbreaks throughout the nation. The web common promoting worth per dozen was $2.152 through the quarter, down 41.5% from the identical year-ago interval, however general gross sales and earnings have been bolstered by file quarterly gross sales quantity by way of whole dozens offered.
What’s subsequent for Cal-Maine Meals buyers?
Together with its quarterly outcomes, Cal-Maine Meals introduced that one in all its Texas-based amenities examined optimistic for avian flu. As such, the corporate was pressured to “depopulate” 1.6 million laying hens and 337,000 pullets — collectively totaling round 3.6% of its whole flock as of March 2, 2024. The corporate says it has quickly ceased manufacturing at that facility and is working to safe manufacturing from different amenities to attenuate any disruption to clients.
In whole, Cal-Maine says that from November 2023 by way of January 2024, the U.S. Division of Agriculture (USDA) division of Animal and Plant Well being Inspection Service says round 15.7 million industrial layer hens and pullets have been depopulated as a consequence of avian flu outbreaks throughout the nation.
Whereas Cal-Maine would clearly wish to minmize the influence to the nationwide egg-laying flock, it is no shock to see the inventory rallying at this time given its better-than-feared quarter and the prospect of doubtless greater egg costs within the close to future.
Steve Symington has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Cal-Maine Meals. The Motley Idiot has a disclosure coverage.
