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Bird Flu Impacts Cal-Maine Foods’ Stock

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Price movement of Cal-Maine Foods

Cal-Maine Foods (CALM) has a market capitalization of $2.4 billion. It rose by 5.2% to close at $49.39 per share as of January 15, 2016. Its price movements on a weekly, monthly, and year-to-date (or YTD) basis are 7.1%, 5.2%, and 6.6%, respectively.

At times, the stock has broken the support of its 20-day and 50-day moving averages. Currently, CALM is trading 4.1% above its 20-day moving average, 3.1% below its 50-day moving average, and 3.6% below its 200-day moving average.

The PowerShares Dynamic Food & Beverage ETF (PBJ) invests 2.4% of its holdings in Cal-Maine Foods. The ETF tracks a multifactor, tiered, equal-weighted index of US food industry stocks. The YTD price movement of PBJ is -2.3% as of January 14, 2016.

The competitors of Cal-Maine Foods and their market capitalizations are as follows:

  • Tyson Foods (TSN) — $18.8 billion
  • Pilgrim’s Pride (PPC) — $5.6 billion
  • Industrias Bachoco (IBA) — $2.3 billion
  • Sanderson Farms (SAFM) — $1.7 billion
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Confirmation of bird flu in Indiana

There has been an increase in demand for eggs after the bird flu was confirmed in Indiana and more than 250,000 turkeys were killed to avoid the disease. This caused the stock price of Cal-Maine Foods to rise.

Performance of Cal-Maine Foods in fiscal 2Q16

Cal-Maine Foods reported fiscal 2Q16 net sales of $546.0 million, a rise of 44.2% compared to its net sales of $378.6 million in fiscal 2Q15. A dozen eggs produced and sold rose by 0.26% and 1.5%, respectively, in fiscal 2Q16 compared to the prior year’s period. The company’s gross profit margin rose by 58.3% in fiscal 2Q16 compared to fiscal 2Q15.

The company’s net income and EPS (earnings per share) rose to $109.2 million and $2.26, respectively, in fiscal 2Q16, compared to $36.6 million and $0.76, respectively, in fiscal 2Q15.

Meanwhile, CALM’s cash and short term investments and inventories rose by 18.1% and 6.4%, respectively, in fiscal 2Q16 on a quarterly basis. The company’s current ratio rose to 3.0, and its debt-to-equity ratio fell to 0.36 in fiscal 2Q16 as compared to ratios of 2.8 and 0.41, respectively, in fiscal 1Q16.

The PE (price-to-earnings) and PBV (price-to-book value) ratios of Cal-Maine Foods are 6.9x and 2.7x, respectively, as of January 15, 2016.

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