What Happened?

Shares of egg company Cal-Maine Foods (NASDAQ:CALM) jumped 6.4% in the morning session after the company reported strong fourth-quarter results, which blew past analysts' revenue and EPS estimates. The top line benefited from a strong demand for shell eggs. The company also gained from improved pricing, given supply constraints caused by recent outbreaks of highly pathogenic avian influenza. Given the favorable demand dynamics, the company highlighted plans to expand its production capacity by adding approximately 1.1 million cage-free layer hens and 250,000 pullets by late summer 2025. Zooming out, we think this was a good quarter with some key areas of upside.

After the initial pop the shares cooled down to $106.09, up 2.3% from previous close.

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What The Market Is Telling Us

Cal-Maine’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 9 months ago when the stock gained 13.7% on the news that the company reported fourth-quarter results that exceeded analysts' EPS expectations by a large magnitude. Its revenue also outperformed Wall Street's estimates. While no specific numerical guidance was given, the commentary was positive. There have been fears of highly pathogenic avian influenza's impact on the industry, and the company stated that "While the more recent outbreaks of HPAI have also affected supply and caused market prices to move higher, the overall market impact has not been as severe." Additionally, it seems like the backdrop for eggs is strong, with Cal-Maine stating that "Demand for shell eggs has remained strong as consumers look for an affordable and nutritious protein option." Overall, this was a good quarter for Cal-Maine.

Cal-Maine is up 0.5% since the beginning of the year, and at $106.09 per share, it is trading close to its 52-week high of $112.24 from December 2024. Investors who bought $1,000 worth of Cal-Maine’s shares 5 years ago would now be looking at an investment worth $2,791.

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