Cal-Maine Foods Inc. (CALM) — Under Priced With Convincing Growth Indicators
Cal-Maine Foods returned losses of -14.0% last year, with its stock price reaching a high of $65.32 and a low of $42.25. Over the same period, the stock underperformed the S&P 500 index by -30.0%. As of April 2023, the company's 50-day average price was $47.6. Cal-Maine Foods, Inc., together with its subsidiaries, produces, grades, packages, markets, and distributes shell eggs. Based in Ridgeland, MS, the mid-cap Consumer Staples company has 2,815 full time employees. Cal-Maine Foods has offered a 9.0% dividend yield over the last 12 months.
Wider Gross Margins Than the Industry Average of 13.23%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (MM) | $1,503 | $1,361 | $1,352 | $1,349 | $1,777 | $3,146 |
| Revenue Growth | n/a | -9.43% | -0.7% | -0.19% | 31.74% | 77.04% |
| Gross Margins | 24% | 16% | 13% | 12% | 19% | 38% |
| Net Margins | 8% | 4% | 1% | 0% | 7% | 24% |
| Net Income (MM) | $126 | $55 | $18 | $2 | $133 | $758 |
| Net Interest Expense (MM) | $17 | $25 | $19 | $16 | $22 | $31 |
| Depreciation & Amort. (MM) | $54 | $55 | $58 | $59 | $68 | $72 |
| Earnings Per Share | $2.6 | $1.13 | $0.38 | $0.04 | $2.72 | $15.52 |
| Diluted Shares (MM) | 48 | 49 | 49 | 49 | 49 | 49 |
| Share Price | $43.22 | $39.54 | $38.08 | $35.09 | $49.5 | $48.37 |
| P/E Ratio | 16.62 | 34.99 | 100.21 | 877.25 | 18.27 | 3.1 |
| Free Cash Flow (MM) | $181 | $47 | -$51 | -$69 | $54 | $726 |
| Capital Expenditures (MM) | $20 | $68 | $124 | $95 | $72 | $137 |
| Entreprise Value (MM) | $2,095 | $1,961 | $1,842 | $1,724 | $2,417 | $2,036 |
| EV / EBITDA | 12.22 | 15.63 | 23.56 | 34.82 | 10.31 | 1.9 |
| Long Term Debt (MM) | $29 | $17 | $32 | $25 | $27 | $43 |
| Net Debt / EBITDA | -0.04 | 0.28 | -0.2 | 0.2 | -0.02 | -0.3 |
| Current Ratio | 6.06 | 4.36 | 5.25 | 4.13 | 3.18 | 8.42 |
Cal-Maine Foods Has Attractive Multiples and Trades Below Its Graham Number:
Cal-Maine Foods has a trailing twelve month P/E ratio of 3.7, compared to an average of 21.21 for the Consumer Staples sector. Based on its EPS guidance of $1.49, the company has a forward P/E ratio of 31.9. The company doesn't provide forward earnings guidance, and the compound average growth rate of its last 6 years of reported EPS is 34.7%. On this basis, Cal-Maine Foods's PEG ratio is 0.11. Using instead the 11.0% weighted average of Cal-Maine Foods's earnings CAGR and the broader market's anticipated 5-year EPS growth rate, the company's PEG ratio is 0.33, which implies that its shares may be underpriced. Additionally, the market is possibly undervaluing Cal-Maine Foods in terms of its equity because its P/B ratio is 1.5 whereas the sector average is 4.12. The company's shares are currently trading -54.2% below their Graham number.
Cal-Maine Foods Is the Subject of Mixed Market Indicators:
The 2 analysts following Cal-Maine Foods have set target prices ranging from $45.0 to $54.0 per share, for an average of $49.5 with a hold rating. As of April 2023, the company is trading -3.8% away from its average target price, indicating that there is an analyst consensus of some upside potential.
Cal-Maine Foods has an unusually large proportion of its shares sold short because 17.8% of the company's shares are sold short. Institutions own 98.5% of the company's shares, and the insider ownership rate stands at 10.91%, suggesting a large amount of insider shareholders. The largest shareholder is Blackrock Inc., whose 15% stake in the company is worth $326,904,471.
