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Category: Stock Market and Cal-Maine Foods (CALM)
Date: 21 July 2020 Stock Price of Cal-Maine: $42.82 We take a look at the 4th quarter earnings report of their 2020 fiscal year of Cal-Maine Foods, the largest producer and marketer of shell eggs in the United States. The group sold 282.4 million eggs during the 4th quarter of their fiscal year.
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Our operations ran well during the fourth quarter, and our managers and employees have done an outstanding job, especially during the outbreak of COVID-19. Despite the challenges, we have remained focused on efficient and responsible management of our production facilities. "
About Cal-Maine Foods
Cal-Maine Foods, Inc. (“we,” “us,” “our,” or the “Company”) is the largest producer and marketer of shell eggs in the United States. In fiscal 2019, we sold approximately 1,038.9 million dozen shell eggs, which we believe represented approximately 19% of domestic shell egg consumption. Our total flock of approximately 36.2 million layers and 9.4 million pullets and breeders is the largest in the U.S. Layers are mature female chickens, pullets are female chickens usually under 18 weeks of age, and breeders are male and female chickens used to produce fertile eggs to be hatched for egg production flocks.
The Company has one operating segment, which is the production, grading, packaging, marketing and distribution of shell eggs. The majority of our customers rely on us to provide most of their shell egg needs, including specialty and non-specialty eggs. Specialty eggs represent a broad range of products. We classify nutritionally enhanced, cage free, organic and brown eggs as specialty products for accounting and reporting purposes. We classify all other shell eggs as non-specialty products. While we report separate sales information for these egg types, there are many cost factors which are not specifically available for non-specialty or specialty eggs due to the nature of egg production. We manage our operations and allocate resources to these types of eggs on a consolidated basis based on the demands of our customers.
We sell most of our shell eggs in the southwestern, southeastern, mid-western and mid-Atlantic regions of the U.S. through our extensive distribution network to a diverse group of customers, including national and regional grocery store chains, club stores, food service distributors and egg product consumers. Some of our sales are completed through co-pack agreements – a common practice in the industry whereby production and processing of certain products is outsourced to another producer. The strength of our position is evidenced by having the largest market share in the grocery segment for shell eggs. We sell shell eggs to a majority of large U.S. food retailers.
We are one of the largest producers and marketers in the U.S. of value-added specialty shell eggs, which have been a significant and growing segment of the market in recent years. A significant number of our food service customers, large restaurant chains, and major retailers, including our largest customers, have committed to exclusive offerings of cage-free eggs by specified future dates. We are working with our customers to ensure a smooth transition in meeting their goals. Our focus for future expansion at our farms will be environments that are cage-free or with equipment that can easily be converted to cage-free, based on a timeline to meet our customer’s needs.
Cal-Maine Foods, Inc. operates farms, processing plants, hatcheries, feed mills, warehouses, offices and other properties located in Alabama, Arkansas, Florida, Georgia, Kansas, Kentucky, Louisiana, Mississippi, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Utah. As of June 1, 2019, the facilities included three breeding facilities, two hatcheries, six wholesale distribution centers, 23 feed mills, 42 shell egg production facilities, 28 pullet growing facilities, 43 processing and packing facilities, and one egg products facility. We also own a significant interest in a company that owns an egg products facility, which is consolidated in our financial statements. Most of our operations are conducted from properties we own.
As of June 1, 2019, we owned approximately 27,458 acres of land in various locations throughout our geographic market area. We have the ability to hatch 21.2 million pullet chicks annually, grow 26.2 million pullets annually, house 44.4 million laying hens, and control the production of 40.3 million layers, with the remainder controlled by contract growers. We own mills that can produce 766 tons of feed per hour, and processing facilities capable of processing approximately 500,000 dozen shell eggs per hour. Over the past five fiscal years, our capital expenditures, excluding acquisitions of shell egg production and processing facilities from others, have totaled an aggregate amount of approximately $312.7 million.
The Company has one operating segment, which is the production, grading, packaging, marketing and distribution of shell eggs. The majority of our customers rely on us to provide most of their shell egg needs, including specialty and non-specialty eggs. Specialty eggs represent a broad range of products. We classify nutritionally enhanced, cage free, organic and brown eggs as specialty products for accounting and reporting purposes. We classify all other shell eggs as non-specialty products. While we report separate sales information for these egg types, there are many cost factors which are not specifically available for non-specialty or specialty eggs due to the nature of egg production. We manage our operations and allocate resources to these types of eggs on a consolidated basis based on the demands of our customers.
We sell most of our shell eggs in the southwestern, southeastern, mid-western and mid-Atlantic regions of the U.S. through our extensive distribution network to a diverse group of customers, including national and regional grocery store chains, club stores, food service distributors and egg product consumers. Some of our sales are completed through co-pack agreements – a common practice in the industry whereby production and processing of certain products is outsourced to another producer. The strength of our position is evidenced by having the largest market share in the grocery segment for shell eggs. We sell shell eggs to a majority of large U.S. food retailers.
We are one of the largest producers and marketers in the U.S. of value-added specialty shell eggs, which have been a significant and growing segment of the market in recent years. A significant number of our food service customers, large restaurant chains, and major retailers, including our largest customers, have committed to exclusive offerings of cage-free eggs by specified future dates. We are working with our customers to ensure a smooth transition in meeting their goals. Our focus for future expansion at our farms will be environments that are cage-free or with equipment that can easily be converted to cage-free, based on a timeline to meet our customer’s needs.
Cal-Maine Foods, Inc. operates farms, processing plants, hatcheries, feed mills, warehouses, offices and other properties located in Alabama, Arkansas, Florida, Georgia, Kansas, Kentucky, Louisiana, Mississippi, North Carolina, Ohio, Oklahoma, South Carolina, Tennessee, Texas and Utah. As of June 1, 2019, the facilities included three breeding facilities, two hatcheries, six wholesale distribution centers, 23 feed mills, 42 shell egg production facilities, 28 pullet growing facilities, 43 processing and packing facilities, and one egg products facility. We also own a significant interest in a company that owns an egg products facility, which is consolidated in our financial statements. Most of our operations are conducted from properties we own.
As of June 1, 2019, we owned approximately 27,458 acres of land in various locations throughout our geographic market area. We have the ability to hatch 21.2 million pullet chicks annually, grow 26.2 million pullets annually, house 44.4 million laying hens, and control the production of 40.3 million layers, with the remainder controlled by contract growers. We own mills that can produce 766 tons of feed per hour, and processing facilities capable of processing approximately 500,000 dozen shell eggs per hour. Over the past five fiscal years, our capital expenditures, excluding acquisitions of shell egg production and processing facilities from others, have totaled an aggregate amount of approximately $312.7 million.
Overview of Cal-Maine Foods' 3rd quarter 2020 earnings report
- Net sales: $453.333 million (up from $280.573 million for the same quarter of the previous year
- Revenue increased by 61.5% over the last 12 months
- Cost of sales: $331.823 million (up from $267.818 million for the same quarter of the previous year)
- Cost of sales increased by 23.9 over the last 12 months
- Margin gain for Cal-Maine as their sales increased at a faster rate than their cost of sales
- Net earnings: $60.464 million (up from a loss of -$19.5 million for the same quarter of the previous year)
- Diluted earnings: $1.24 (up from -$0.41 profit for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 48.608 million (up from 48.442 million for the same quarter of the previous year)
- Cash and cash equivalents: $232.293 million
- Cash and cash equivalents per share: $4.77
- Cash and cash equivalents makes up 10.9% of Cal-Maine Foods' market capital
- Cash and cash equivalents makes up 19.2% of Cal-Maine Foods' total assets
- Accounts receivable: $98.375 million
- Accounts receivable makes up 8.2% of Cal-Maine's total assets
- Stockholders equity in Cal-Maine Foods' : $1.009 billion
- Stockholders equity per share for Cal-Maine Foods': $22.60
- Cal-Maine Foods' is trading at 1.94 times its stockholders equity per share, which is just outside the expected range of between 2 and 4 times that most firms tend to trade at.
- For some perspective firms in the S&P 500 trade at an average price to book value of 3.7
Cal-Maine Foods' management commentary on their 4th quarter 2020 results
JACKSON, Miss.--(BUSINESS WIRE)--Jul. 20, 2020-- Cal-Maine Foods, Inc. (NASDAQ: CALM) today reported results for the fourth quarter (13 weeks) and fiscal year ended May 30, 2020. Net sales for the fourth quarter of fiscal 2020 were $453.3 million, a 61.6 percent increase compared to $280.6 million for the fourth quarter of fiscal 2019. The Company reported net income of $60.5 million, or $1.25 per basic share and $1.24 per diluted share, for the fourth quarter of fiscal 2020, compared to net loss of $19.8 million, or $(0.41) per basic and diluted share, for the fourth quarter of fiscal 2019. For the fiscal year 2020, net sales were $1,351.6 million compared to $1,361.2 million for the prior year. The Company reported net income of $18.4 million, or $0.38 per basic and diluted share, for fiscal 2020, compared to net income of $54.2 million, or $1.12 per basic and diluted share, for the prior year
Dolph Baker, chairman and chief executive officer of Cal-Maine Foods, Inc., stated, “Fiscal 2020 demonstrated Cal-Maine Foods’ resiliency in the face of challenging business conditions and volatile egg prices. After three fiscal quarters characterized by an oversupply of eggs and depressed market prices, demand for eggs increased and market prices rose 62.4 percent during our fourth fiscal quarter over the average price for the first three quarters, as consumers purchased more eggs for preparing meals at home in response to the COVID-19 pandemic. This demand trend also coincided with higher seasonal demand during the peak Easter season. As a result, our sales volumes were up 10.9 percent compared with the fourth quarter of fiscal 2019. We are extremely proud of the dedicated work of Cal-Maine Foods’ employees across our operations who worked particularly hard to meet the unexpected and unprecedented demand for eggs. The Southeast large market average price for conventional eggs for the fourth quarter of fiscal 2020 increased to $1.71 compared to $0.86 for the fourth quarter of fiscal 2019, with a high of $3.18 and a low of $1.02. For fiscal 2020 the Southeast large market average price for conventional eggs was $1.22 compared to $1.23 for fiscal 2019, with a high of $3.18 and a low of $0.62.
“The supply of eggs has continued to trend downward through the fourth quarter of fiscal 2020. Hen numbers reported by the United States Department of Agriculture (“USDA”) as of June 1, 2020, were 319.8 million, which represents 13.9 million less hens than reported a year ago, when the USDA also reported high flock productivity. The USDA reported that the hatch from January through May 2020 decreased 5.0 percent, including a 13.1 percent decrease in May, as compared to the same period in 2019, which will likely further reduce future egg supply levels.
"For the fourth quarter, sales of specialty eggs were $133.3 million, accounting for 29.9 percent of our egg sales revenue, compared with $119.9 million, or 44.1 percent of egg sales revenue, in the fourth quarter of fiscal 2019. The increase in specialty egg revenue in the fourth quarter 2020 resulted from a 10.4 percent increase in specialty dozens sold in the fourth quarter of fiscal 2020 over the fourth quarter of fiscal 2019, as well as slight increase in specialty egg prices. "Specialty eggs are an important part of our growth strategy, and we strive to provide a favorable product mix in line with consumer demand. We have continued to position Cal-Maine Foods to meet the expected additional demand for cage-free eggs. California, Colorado, Washington, Oregon, Massachusetts, Rhode Island and Michigan have all passed minimum space and/or cage-free requirements, mandating sale of only cage-free eggs with implementation of these laws ranging from January 2022 to January 2026. These states represent approximately 22.9 percent of the U.S. total population according to the U.S. Census Bureau. Legislation is also pending in Arizona and Hawaii for cage-free requirements. We have invested over $371.7 million in facilities, equipment and related operations to expand our cage-free production starting with our first facility in 2008. Throughout the next two years, additional cage-free capacity will come online in Florida, Texas and Utah, which will provide significant additional processing, pullet and production capacity in time to meet expected customers’ needs.
Dolph Baker, chairman and chief executive officer of Cal-Maine Foods, Inc., stated, “Fiscal 2020 demonstrated Cal-Maine Foods’ resiliency in the face of challenging business conditions and volatile egg prices. After three fiscal quarters characterized by an oversupply of eggs and depressed market prices, demand for eggs increased and market prices rose 62.4 percent during our fourth fiscal quarter over the average price for the first three quarters, as consumers purchased more eggs for preparing meals at home in response to the COVID-19 pandemic. This demand trend also coincided with higher seasonal demand during the peak Easter season. As a result, our sales volumes were up 10.9 percent compared with the fourth quarter of fiscal 2019. We are extremely proud of the dedicated work of Cal-Maine Foods’ employees across our operations who worked particularly hard to meet the unexpected and unprecedented demand for eggs. The Southeast large market average price for conventional eggs for the fourth quarter of fiscal 2020 increased to $1.71 compared to $0.86 for the fourth quarter of fiscal 2019, with a high of $3.18 and a low of $1.02. For fiscal 2020 the Southeast large market average price for conventional eggs was $1.22 compared to $1.23 for fiscal 2019, with a high of $3.18 and a low of $0.62.
“The supply of eggs has continued to trend downward through the fourth quarter of fiscal 2020. Hen numbers reported by the United States Department of Agriculture (“USDA”) as of June 1, 2020, were 319.8 million, which represents 13.9 million less hens than reported a year ago, when the USDA also reported high flock productivity. The USDA reported that the hatch from January through May 2020 decreased 5.0 percent, including a 13.1 percent decrease in May, as compared to the same period in 2019, which will likely further reduce future egg supply levels.
"For the fourth quarter, sales of specialty eggs were $133.3 million, accounting for 29.9 percent of our egg sales revenue, compared with $119.9 million, or 44.1 percent of egg sales revenue, in the fourth quarter of fiscal 2019. The increase in specialty egg revenue in the fourth quarter 2020 resulted from a 10.4 percent increase in specialty dozens sold in the fourth quarter of fiscal 2020 over the fourth quarter of fiscal 2019, as well as slight increase in specialty egg prices. "Specialty eggs are an important part of our growth strategy, and we strive to provide a favorable product mix in line with consumer demand. We have continued to position Cal-Maine Foods to meet the expected additional demand for cage-free eggs. California, Colorado, Washington, Oregon, Massachusetts, Rhode Island and Michigan have all passed minimum space and/or cage-free requirements, mandating sale of only cage-free eggs with implementation of these laws ranging from January 2022 to January 2026. These states represent approximately 22.9 percent of the U.S. total population according to the U.S. Census Bureau. Legislation is also pending in Arizona and Hawaii for cage-free requirements. We have invested over $371.7 million in facilities, equipment and related operations to expand our cage-free production starting with our first facility in 2008. Throughout the next two years, additional cage-free capacity will come online in Florida, Texas and Utah, which will provide significant additional processing, pullet and production capacity in time to meet expected customers’ needs.
“Our operations ran well during the fourth quarter, and our managers and employees have done an outstanding job, especially during the outbreak of COVID-19. Despite the challenges, we have remained focused on efficient and responsible management of our production facilities. Operating income was $76.1 million in the fourth quarter compared to an operating loss of $30.4 million in the prior-year fourth quarter. We also benefitted from a more favorable effective tax rate in fiscal 2020 and in the fourth quarter, as we recorded a tax benefit of $2.4 million related to the carryback provisions of the Coronavirus Aid, Relief and Economic Security Act of 2020 (CARES Act). Overall, our farm production costs per dozen were down 0.8 percent over the fourth quarter of fiscal 2019, reflecting a 1.5 percent drop in feed costs. According to USDA reports, current supplies of corn and soybeans are favorable, and we believe we will continue to have an adequate supply of both grains in fiscal 2021. However, current ongoing uncertainties and supply chain disruptions related to the COVID-19 outbreak, weather fluctuations and geopolitical issues surrounding trade agreements and international tariffs may lead to further price volatility.
“Looking ahead, we will continue to take all necessary precautions in the management of our operations in response to the COVID-19 pandemic. Our top priority is the health and safety of our employees, who work hard every day to produce eggs for our customers and contribute to a stable food supply. We are also grateful for our supply chain partners who have supported our ability to operate and meet our delivery requirements with minimal disruption. As the coronavirus continues to spread and reach more rural communities where we operate, it is critical that we provide a safe working environment, and we continue to implement appropriate protections taking into account protocols recommended by the Centers for Disease Control (CDC) and other government health agencies.
For fiscal 2020, we incurred expenses of approximately $2.8 million related primarily related to supplemental pay. We are committed to making the necessary investments to support and protect all Cal-Maine Foods employees. “While we are facing an uncertain environment, we will continue to execute our growth strategy in fiscal 2021 - provide a favorable product mix, including cage-free and other specialty eggs, invest in our operations, identify acquisition or other growth opportunities that enhance our production, and manage our operations in a responsible and sustainable manner. On June 29, 2020, we published the Cal-Maine Foods 2019 Sustainability Overview, which includes our corporate initiatives that support environmental and social responsibility throughout our operations. Above all, we are focused on safely meeting the needs of our customers and providing outstanding products and service. We have a strong balance sheet with the financial flexibility to support our growth strategy, and we look forward to the opportunities ahead for Cal-Maine Foods in fiscal 2021,” added Baker
“Looking ahead, we will continue to take all necessary precautions in the management of our operations in response to the COVID-19 pandemic. Our top priority is the health and safety of our employees, who work hard every day to produce eggs for our customers and contribute to a stable food supply. We are also grateful for our supply chain partners who have supported our ability to operate and meet our delivery requirements with minimal disruption. As the coronavirus continues to spread and reach more rural communities where we operate, it is critical that we provide a safe working environment, and we continue to implement appropriate protections taking into account protocols recommended by the Centers for Disease Control (CDC) and other government health agencies.
For fiscal 2020, we incurred expenses of approximately $2.8 million related primarily related to supplemental pay. We are committed to making the necessary investments to support and protect all Cal-Maine Foods employees. “While we are facing an uncertain environment, we will continue to execute our growth strategy in fiscal 2021 - provide a favorable product mix, including cage-free and other specialty eggs, invest in our operations, identify acquisition or other growth opportunities that enhance our production, and manage our operations in a responsible and sustainable manner. On June 29, 2020, we published the Cal-Maine Foods 2019 Sustainability Overview, which includes our corporate initiatives that support environmental and social responsibility throughout our operations. Above all, we are focused on safely meeting the needs of our customers and providing outstanding products and service. We have a strong balance sheet with the financial flexibility to support our growth strategy, and we look forward to the opportunities ahead for Cal-Maine Foods in fiscal 2021,” added Baker
Cal-Maine Foods (NASDAQ: CALM) stock price history
The image below, obtained from Google, shows the stock price history of Cal-Maine Foods (NASDAQ: CALM) over the last 5 years. And it's been a very volatile time for Cal-Maine Foods stockholders with a negative bias. 5 years ago the stock was trading at around $51.50 a stock and it is currently trading at $43.87 a stock. So over a 5 year period the stock of Cal-Maine lost -14.8%
The stock is also trading at a lot closer to its 52 week high of $46.65 than it is to its 52 week low of $30.74, which is a clear indication to us that the short term sentiment and momentum of Cal-Maine foods is positive at this point in time.
The stock is also trading at a lot closer to its 52 week high of $46.65 than it is to its 52 week low of $30.74, which is a clear indication to us that the short term sentiment and momentum of Cal-Maine foods is positive at this point in time.
Recent coverage of Cal-Maine Foods
The extract below covers the latest earnings report from Cal-Maine as obtained from Invezz.com
Cal-Maine Foods (NASDAQ: CALM) published its quarterly financial results on Monday that highlighted the company to have returned to profit in the fiscal fourth quarter. Cal-Maine donated 300,000 eggs to Alabama food banks last week. Shares of the company are currently more than 2% down on Monday. At £34.26 per share, Cal-Maine Foods is roughly 3% up year to date in the stock market after recovering from a low of £24.48 per share in March. Learn more about how do people make money on the stock market.
Cal-Maine reports £358.59 million of total quarterly sales. The company reported £47.86 million of net income in Q4 that translates to 98 pence per share. In the same quarter last year, Cal-Maine had recorded £15.66 million of loss or 32.43 pence per share. In terms of sales, the country’s largest egg producer boasted to have jumped from £221.97 million in the comparable quarter of last year to £358.59 million in the recent quarter.
Analysts had expected the company to print £359.14 million in sales and 95 pence of earnings per share. CEO Dolph Baker commented on the company’s earnings report on Monday and said: “After three fiscal quarters characterised by an oversupply of eggs and depressed market prices, demand for eggs increased, and market prices rose 62.4% during our fourth fiscal quarter over the average price for the first three quarter, as consumers purchased more eggs for preparing meals at home in response to the COVID-19 pandemic.”
Read the full article here
Cal-Maine Foods (NASDAQ: CALM) published its quarterly financial results on Monday that highlighted the company to have returned to profit in the fiscal fourth quarter. Cal-Maine donated 300,000 eggs to Alabama food banks last week. Shares of the company are currently more than 2% down on Monday. At £34.26 per share, Cal-Maine Foods is roughly 3% up year to date in the stock market after recovering from a low of £24.48 per share in March. Learn more about how do people make money on the stock market.
Cal-Maine reports £358.59 million of total quarterly sales. The company reported £47.86 million of net income in Q4 that translates to 98 pence per share. In the same quarter last year, Cal-Maine had recorded £15.66 million of loss or 32.43 pence per share. In terms of sales, the country’s largest egg producer boasted to have jumped from £221.97 million in the comparable quarter of last year to £358.59 million in the recent quarter.
Analysts had expected the company to print £359.14 million in sales and 95 pence of earnings per share. CEO Dolph Baker commented on the company’s earnings report on Monday and said: “After three fiscal quarters characterised by an oversupply of eggs and depressed market prices, demand for eggs increased, and market prices rose 62.4% during our fourth fiscal quarter over the average price for the first three quarter, as consumers purchased more eggs for preparing meals at home in response to the COVID-19 pandemic.”
Read the full article here
Cal-Maine Foods (NASDAQ:CALM) latest stock valuation
So what is Cal-Maine Foods (NASDAQ: CALM) stock worth based on the release of their 4th quarter and full fiscal 2020 earnings report? .Based on the earnings reported and their current financial position we value the stock of Cal-Maine
All things consider our valuation models provide a target price (full value price) for Cal-Maine Foods (CALM) at $34.40 a stock. We therefore believe that Cal-Maine Foods (CALM) stock is overvalued at this point in time.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $34.40. We therefore believe a good entry point into Cal-Maine stock would be at $31 or below. Based on all the above we expect the stock price of Cal-Maine Foods to pull back to closer to our target price in coming weeks and months and we rate the stock as Cal-Maine as avoid.
All things consider our valuation models provide a target price (full value price) for Cal-Maine Foods (CALM) at $34.40 a stock. We therefore believe that Cal-Maine Foods (CALM) stock is overvalued at this point in time.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price, which in this case is $34.40. We therefore believe a good entry point into Cal-Maine stock would be at $31 or below. Based on all the above we expect the stock price of Cal-Maine Foods to pull back to closer to our target price in coming weeks and months and we rate the stock as Cal-Maine as avoid.
Next earnings release of Cal-Maine Foods
It is expected that Cal-Maine will release their 1st quarter 2021 earnings report in early October 2020