uploads///Stock Performance of Cal Maine Foods and Peers

Why Did Cal-Maine Foods Report a Loss in Fiscal 4Q16?



Loss in 4Q16

On July 18, 2016, Cal-Maine Foods (CALM) reported its fourth quarter and fiscal year results ending May 28, 2016. The company’s adjusted EPS (earnings per share) was a loss of $0.01 per share for fiscal 4Q16. This is a fall compared to net EPS of $0.95 in fiscal 4Q15.

The company fell behind analysts’ estimates for the last four quarters. However, it broke the trend in the third quarter and surpassed the EPS estimates by 34%. For 4Q16, analysts expected an adjusted loss per share of $0.19. As we discussed in Can Cal-Maine Foods Regain Its Momentum?, management mentioned that the demand for eggs is less during summer and it picks up in the fall. The lower demand for eggs and fluctuating market conditions justify the lower revenue and earnings for the fourth quarter.

The net loss for fiscal 4Q16 was $376,000—compared to the net profit of $46.1 million in fiscal 4Q15. However, for fiscal 2016, earnings showed 96% growth—around $6.53 per share compared to $3.33 for fiscal 2015. The net income for fiscal 2016 was $316.0 million—compared to $161.3 in fiscal 2015.

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Peers’ earnings

Cal-Maine Foods’ peers in the industry include Pilgrim’s Pride (PPC), Hormel Foods (HRL), and Tyson Foods (TSN). Hormel and Tyson demonstrated positive growth in earnings of 19% and 43% for their last reported quarter. However, Pilgrim’s Pride’s earnings fell 44% for its last quarter. The PowerShares Dynamic Food and Beverage (PBJ) invests 5% in Hormel and Tyson. The Global X SuperDividend U.S. ETF (DIV) invests 1.9% in Cal-Maine.

What’s in the series?

In this series, we’ll look at how Cal-Maine Foods performed in fiscal 4Q16. We’ll also discuss what led to lower revenues for the quarter. We’ll look at what resulted in higher operating profit and margins for fiscal 2016 along with the performance of its specialty eggs business. We’ll also see how much Cal-Maine has returned to shareholders in fiscal 2016. Lastly, we’ll discuss the stock price reaction to results, its valuation, its moving averages, and what Wall Street is recommending for the stock.

Let’s start with the revenue.


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