Cal-Maine Foods climbed above a buy point this week, as analysts made favorable comments less than one week before the nation's largest egg producer announces quarterly results.
BMO raised its earnings estimates for the quarter ended in May to $6.40 a share from an earlier estimate of $5.75, and raised its current fiscal-year estimate to $10.95 per share from $10.62.
Analyst Benjamin Mayhew cited a "resilient near-term pricing environment" partly offset by lower volumes in the May-ended quarter. And the company's acquisition of Echo Lake Foods provides a positive for fiscal 2026 results.
On June 2, Cal-Maine Foods completed its acquisition of Echo Lake Foods, which makes ready-to-eat egg products and breakfast foods. Echo Lake sales were about $240 million last year. It has achieved a five-year compound annual sales growth rate of around 10%. The $258 million deal gives Cal-Maine an entry into the value-added food portion of the egg category and expands its ties with the retail and food service industries.
Egg Prices And Earnings Performance
Cal-Maine's latest quarter comes as the U.S. Department of Agriculture showed a quarterly average of about $3.30 per dozen eggs, up 53% year over year, Mayhew said in a note to clients.
"That said, we believe (fiscal Q4) marks the start of lower commodity egg prices and normalization of earnings" following a record fiscal Q3 at $10.38 per share. That leaves a "tough setup for investing" in Cal-Maine at these levels despite the firm's higher earnings forecast. BMO has a market perform rating on the stock.
Also Tuesday, Stephens raised the price target on Cal-Maine Foods to 108 from 97 and kept an equal weight rating. Limited supplies and stronger-than-usual summer demand are keeping egg fundamentals strong, Stephens analysts said, according to TheFly.com.
The company will announce fiscal fourth quarter results on Tuesday. The consensus analyst earnings estimate is $6.28 a share, an increase of 198%. Sales are expected to climb 42% to $909 million, according to FactSet.
In its February-ended quarter, Cal-Maine's sales soared 102% to $1.418 billion. The company cited higher selling prices for eggs as a bird flu outbreak cut the supply of eggs during peak seasonal demand. The average selling price per dozen was $4.06 vs. $2.247 a year prior. Selling volumes also rose in the quarter.
In a presentation to investors, Cal-Maine said it has a biosecurity team working to control bird flu.
Egg Prices Drive Performance
Cal-Maine is not a tech company, but its financial performance could be mistaken for that of an artificial intelligence provider. The company leads the meat products industry group with a 98 Composite Rating. Its EPS Rating also is the best in the group, according to IBD Stock Checkup.
Earnings ballooned to $3.04 a share from 2 cents in the August-ended quarter, according to IBD MarketSurge. EPS were $4.48 vs. 35 cents in the November quarter and up 246% to $10.38 a share (vs. $3 a year earlier) in the December-February period.
After four straight quarters of declines, sales surged 71%, 83% and 102% in the three most recent reports.
Cal-Maine Stock Tops Buy Point
Cal-Maine stock rose above the 104.49 buy point of a cup-with-handle base on Tuesday but closed below the entry. Wednesday at midday, however, shares regained the entry and were in a buy range that goes as high as 109.71.
The stock held support at its 200-day moving average as it climbed the right side of the pattern and is also trading above the 50-day moving average. The relative strength line, however, hasn't kept up with the stock price's advance for about a month.
Cal-Maine stock has a 21-day average true range (ATR) of 2.83%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
