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Cal-Maine earnings soar but stock takes a beating

 

Jack Weatherly

Jackson-based Cal-Maine Foods Inc., the largest producer of in-shell fresh eggs in the United States, had a terrific fiscal first quarter, thanks to the fact that eggs sold for 65.7 percent more than they did in the year-ago quarter.

Why the price spike? In two words, avian flu, which forced the destruction of 48 million chickens and turkeys in the upper Midwest, but none of Cal-Maine’s flocks. Net income was $143 million, or $2.95 per share, compared with $27.7 million, or 57 cents a share.

Aside from the going rate for fresh eggs being so high, Cal-Maine reported that sales volumes of shell eggs up 2.8 percent “in what is typically our slowest quarter,” Chairman and Chief Executive Dolph Baker said in a release on Monday.

“We believe that eggs prices will remain very high until the supply situation returns to more normal levels,” Baker said. “While there have been no further reported outbreaks . . . we continue to closely monitor the situation.”

Operating costs were likewise enhanced by a 13.4 percent drop in average feed costs per dozen and overall farm production costs were down 8 percent.

Still, higher prices for processing, purchasing eggs from other producers, cartons and packaging more than offset those gains, according to Chief Financial Officer Tim Dawson.

Despite the overall numbers, Cal-Maine’s stock took a beating on the Nasdaq stock market on Monday, closing at $50.63, down $7.01, or 12.16 percent.

Expectations of analysts surveyed by Thompson Reuters were $3.14 on earnings per share, compared with the reported $2.95.

Insider Monkey said that “the market could be selling off Cal-Maine because there hasn’t been another detected case of bird flu in the U.S. in more than three months.”

Insider Monkey is a finance website that focuses on hedge funds.

Specialty eggs – including nutritionally enhanced, organic and cage-free – continue to be a bright spot. They accounted for 24.5 percent of shell eggs sold and 27.1 percent of shell-eggs revenue, Baker said.

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