CALM Stock Hits 52-Week High: Is There More Room for Growth?

Shares of CalMaine Foods, Inc. CALM hit a new 52-week high of $102 yesterday, before closing slightly lower at $101.79.

CALM stock has gained 47.5% over the past three months compared with the agriculture products industry’s 2.9% growth and the S&P 500’s 9.4% rise. Meanwhile, the Basic Materials sector has declined 0.4%.

CalMaine’s share price performance was driven by upbeat first-quarter fiscal 2025 results, which showcased higher pricing and sales. CALM’s recently announced plans to expand cage-free production capabilities to meet growing demand have also contributed to the stock’s gain.

CALM Stock’s Three-Month Price Performance

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Image Source: Zacks Investment Research

This producer and distributor of fresh shell eggs is currently trading above the 50-day and 200-day simple moving averages, signaling strong upward momentum and price stability. This technical strength indicates positive market sentiment and confidence in the company’s financial health and prospects.

CALM Stock Trading Above 50 and 200-Day Moving Average

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Image Source: Zacks Investment Research

Let us take a look into the factors that are driving CALM stock.

CALM’s 1Q25 Results Gain on Higher Pricing & Record Sales

CalMaine’s shares have gained 36% since its reported first-quarter fiscal 2025 results on Oct. 1, 2024. Net sales surged 71% year over year to $785.9 million. Earnings of $3.06 per share marked a solid improvement from 2 cents reported in the year-ago quarter. 

The improvement in both the top and bottom lines was attributed to the net average selling price of shell eggs and increase in total dozens sold.  CalMaine’s focused approach to adding production capacity through acquisitions and organic growth has led to improved volumes.

CALM sold 310.0 million dozens of shell eggs, 13.5% higher than the first quarter of fiscal 2024. Sales of conventional eggs totaled 200.0 million dozens compared with 181.5 million dozens in the prior-year quarter. Specialty egg volumes sold increased 20.1% to 110 million dozens from the year-ago quarter figure. CalMaine made quarterly records for the total dozens sold and specialty dozens sold.

CalMaine’s Expansion Plans, New Products to Fuel Growth

In October, CalMaine announced that its board of directors approved $40 million in new capital projects to expand its cage-free production capabilities. The projects include the addition of five new cage-free layer houses across CALM’s locations in Florida, Georgia, Utah and Texas. This will add production capacity for approximately 1.0 million cage-free layer hens by late summer 2025.

CalMaine has also been remodeling the assets acquired from Tyson Foods, Inc. TSN in March 2024 for shell egg production. The assets acquired from Tyson were a broiler processing plant, hatchery and feed mill in Dexter, MO.
CALM remains focused on being the most efficient and sustainable producer of fresh shell eggs and egg products. In line with the evolving consumer demand, it is offering choices that include conventional, cage-free, organic, brown, free-range, pasture-raised and nutritionally enhanced eggs.

The company is also expanding its product portfolio to include value-added egg products. This is evident in its investment in Meadowcreek Foods, LLC for hard-cooked eggs and in Crepini Foods, a new venture offering egg products and prepared foods. CalMaine expects to leverage the Crepini brand of quality products, including egg wraps and protein pancakes, to extend its reach to major retailers.

A Potential Obstacle for CALM Stock

Outbreaks of highly pathogenic avian influenza (HPAI) continue to occur in U.S. poultry flocks. From November 2023 to July 2024, approximately 33.1 million commercial laying hens and pullets have been depopulated.

During the third and fourth quarters of fiscal 2024, CalMaine reported HPAI outbreaks within its facilities located in Kansas and Texas that led to the total depopulation of approximately 3.1 million laying hens and 577,000 pullets. Both locations have since been cleared by the USDA as fit to resume operations.

The extent of possible future outbreaks, with heightened risk during the migration seasons, and more recent HPAI events, which have been directly linked to dairy cattle operations, cannot be predicted.

CalMaine Stock Trading at a Premium

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CalMaine is currently trading at forward 12-month earnings multiple of 17.34X compared with the industry’s 12.87X.

What Should be Your Approach for CALM Stock?

CalMaine’s efforts to expand capacity, including cage-free and other specialty egg production, are commendable. Efforts to diversify its product offerings will provide a distinct competitive advantage to the company. Considering the risk related to the outbreaks of HPAI and its premium valuation, new investors can wait for a better entry point.  Existing stakeholders should maintain their position in this Zacks Rank #3 (Hold) stock to gain from its long-term prospects.

Key Picks in the Sector

Better-ranked stocks in the basic materials space are Carpenter Technology Corporation CRS and DuPont de Nemours, Inc. DD

CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 14.1%. The consensus estimate for the company’s current fiscal-year earnings is pegged at $6.74 per share, indicating a year-over-year rise of 42%. Its shares have gained 36.5% in the past three months. Carpenter Technology currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for DD’s current-year earnings is pegged at $3.88 per share, indicating a year-over-year rise of 11.5%. DD, which currently carries a Zacks Rank #2 (Buy), beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 12.9%. The company's shares have gained 4.5% in the past three months.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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