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How Did Cal-Maine Foods Impress in Fiscal 2Q16?

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What contributed to higher sales in 2Q16?

In fiscal 2Q16, higher average selling prices and a modest rise in the volume contributed to Cal-Maine Foods’ (CALM) revenue growth. Sales improved by 47.9% in 2Q16—compared to the same quarter a year ago. Sales for the first half of fiscal 2016 also rose by 57.1%. The sales reached $1,155 million. Also, the average selling prices for shell eggs rose by 43%—compared to the same period a year ago.

How Did Cal-Maine Foods Impress in Fiscal 2Q16?

Specialty eggs contributed to the overall sales volume for fiscal 2Q16. They accounted for 24.6% of the total number of shell eggs sold—including the ones sold through co-pack arrangements. They also contributed to 28.8% of shell eggs’ revenue for the quarter.

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Higher margins in 2Q16

The company’s margins improved in fiscal 2Q16—compared to the same quarter a year ago. It reported an operating margin of 29.7%, a net margin of 20%, and a gross margin of 38.8%. The operating earnings improved to $166 million—compared to $55 million for 2Q15. This rise was supported by a 1.2% fall in the average feed costs per dozen—compared to the same quarter a year ago. It fell by 7.4% for the first half of the fiscal year.

Positive earnings growth

Cal-Maine showed positive year-over-year growth of 49% in its fiscal 2Q16 earnings per share. However, it missed estimates of $2.46 by 8%.

Peers’ performance

Cal-Maine Foods’ peers in the industry include Pilgrim’s Pride (PPC), Hormel Foods (HRL), and Tyson Foods (TSN). They reported revenue of $1.96 billion, $2.29 billion, $9.15 billion, respectively, for their last reported quarters. The iShares Morningstar Mid Value ETF (JKI) and the VanEck Vectors Agribusiness ETF (MOO) invest 1.2% and 3.4%, respectively, of their portfolios in Tyson Foods.

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