Cal-Maine Foods (CALM -0.91%), the country's largest shell egg producer and distributor, is slated to report its fourth-quarter and full-year results for fiscal 2022 after the market close on Tuesday, July 19.
Investors will probably be approaching the company's report with optimism. Egg prices have risen sharply this year because of the inflationary pressures affecting most products and a severe outbreak of highly pathogenic avian influenza ("bird flu") in the United States, which has decreased the country's number of table egg layer hens. And demand should remain at least relatively solid because most consumers don't change their consumption habits much when egg prices rise.
In 2022, Cal-Maine stock has returned 43.7% through July 15, while the S&P 500's return is 18.3% in the red. That return makes it the year's second-best performer among 160 small-cap or larger stocks (stocks with market caps of at least $300 million) in the consumer staple sector. (Grocery Outlet Holding stock is the top performer in this category, as it's up 60.9% so far this year.)
While there are no guarantees -- especially in the current challenging and volatile market -- a stronger-than-expected earnings report should help propel Cal-Maine stock higher.
Here's what to watch in the company's fourth-quarter report.
Image source: Getty Images.
Cal-Maine Foods' key quarterly numbers
| Metric | Fiscal Q4 2021 Result | Wall Street's Fiscal Q4 2022 Consensus Estimate | Wall Street's Projected Change (YOY) |
|---|---|---|---|
| Revenue | $349.8 million | $576.1 million | 65% |
| Earnings per share | ($0.09) | $1.84 | Result expected to flip to positive from negative. |
Data sources: Cal-Maine Foods and Yahoo! Finance. Fiscal Q4 2022 ended in late May. YOY = year over year.
The company is facing easy comparables. In the year-ago period, the average selling price for conventional eggs declined from the prior year. The revenue decline hurt the bottom line, as did surging feed costs from supply chain disruptions related to the pandemic and weather fluctuations, which affect production and yields.
These supply chain issues have persisted, though the company has done a good job at managing expenses. Investors can expect that an additional factor, the Russia-Ukraine war, which started in late February, exerted pricing pressures on feed prices in the quarter to be reported.
For additional context, last quarter, which ended Feb. 26, Cal-Maine's revenue surged 33% year over year to $477.5 million. Growth was driven by a 29% rise in the average selling price the company received for its eggs and a 3% increase in sales volume.
Specialty eggs (such as cage-free and organic) accounted for 33% of total volume sold, and an outsize 39% of total revenue. Consumer demand for specialty eggs has increased in recent years, as has demand from large corporate buyers, many of which have pledged to only buy cage-free eggs by a certain date. This trend is a positive for Cal-Maine since specialty eggs are more profitable than conventional eggs.
Last quarter's net income was $39.5 million, or $0.81 per share, up 189% from $0.28 per share in the year-ago period. That result was a bit lower than the $0.83 Wall Street had expected.
Management doesn't provide guidance, which makes sense given that the price of shell eggs tends to fluctuate considerably.
