Shares of Cal-Maine Foods (NASDAQ: CALM) climbed as high as 7.2% early Wednesday, then settled to close up 3.6% after the egg producer announced better-than-expected quarterly results. This occurred despite news of a new Avian flu outbreak at one of its facilities.
Cal-Maine Foods' better-than-feared quarter
For its fiscal third quarter ended March 2, 2024, Cal-Maine Foods' revenue declined 29.5% year over year to $703.1 million, translating to net income of $146.7 million, or $3 per share (down from $6.62 per share in the same year-ago period). Analysts, on average, were only modeling earnings of $2.46 per share on revenue closer to $692 million.
Delving deeper into its results, the company's revenue decline was driven entirely by lower average selling prices. In last year's fiscal Q3, shell egg prices stood at record highs, due to a combination of supply chain challenges and the impact of multiple avian flu outbreaks across the country. The net average selling price per dozen was $2.152 during the quarter, down 41.5% from the same year-ago period, but overall sales and earnings were bolstered by record quarterly sales volume in terms of total dozens sold.
What's next for Cal-Maine Foods investors?
Along with its quarterly results, Cal-Maine Foods announced that one of its Texas-based facilities tested positive for avian flu. As such, the company was forced to "depopulate" 1.6 million laying hens and 337,000 pullets -- together totaling around 3.6% of its total flock as of March 2, 2024. The company says it has temporarily ceased production at that facility and is working to secure production from other facilities to minimize any disruption to customers.
In total, Cal-Maine says that from November 2023 through January 2024, the U.S. Department of Agriculture (USDA) division of Animal and Plant Health Inspection Service says around 15.7 million commercial layer hens and pullets have been depopulated due to avian flu outbreaks across the country.
While Cal-Maine would obviously like to minmize the impact to the national egg-laying flock, it's no surprise to see the stock rallying today given its better-than-feared quarter and the prospect of potentially higher egg prices in the near future.
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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cal-Maine Foods. The Motley Fool has a disclosure policy.
