Simple Concepts Research Group

Is Cal-Maine (NASDAQ: CALM) Currently Trading At A Discount?

by | Jan 30, 2023 | Consumer Staples, Deep Discounts, Stock Picks, Uncategorized

cal-maine foods calm stock ticker

Cal-Maine Foods (CALM) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Cal-Maine Foods (CALM) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Cal-Maine Foods Fundamentals

CALM Stock Rating

Stock Price Target: $71.22

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Cal-Maine Foods in comparison to the Food Processing industry and the S&P 500.

Cal-Maine Foods is a Small Cap company with a Market Cap of $2.42B.

How are investors using Cal-Maine Foods earnings yield to assess the company?

Cal-Maine Foods (CALM)_ Earnings Yield in Comparison to the Food Processing Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Cal-Maine Foods is 29.24%, in comparison to 4.60% for the S&P 500 and 3.52% for the 10-year treasury bond. The median earnings yield for the Food Processing industry is 7.55%.

What does Cal-Maine Foods Price-to-Earnings Ratio (P/E) tell investors about the company?

Cal-Maine Foods (CALM)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Food Processing Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Cal-Maine Foods is currently trading at a P/E of 5.65. The P/E for the Food Processing industry is 113.24 and the P/E for the S&P 500 is 21.76.

What is the current Price-to-Sales Ratio (P/S) for Cal-Maine Foods?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Cal-Maine Foods is currently trading at a P/S of 1.5. The P/S for the Food Processing industry is 1.66 and the P/S for the S&P 500 is 2.37.

How does Cal-Maine Foods Price-to-BookRatio (P/B) compare to the Food Processing industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Cal-Maine Foods P/B ratio is 2.42. The P/B for the Food Processing industry is 2.61 and the P/B for the S&P 500 is 4.09.

How attractive is Cal-Maine Foods Return on Invested Capital (ROIC) to investors?

Cal-Maine Foods (CALM)_ Return on Invested Capital in Comparison to the Food Processing Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Cal-Maine Foods ROIC is currently 40.80% in comparison to 18.60% for the Food Processing industry and 10.10% for the S&P 500.

Cal-Maine Foods (CALM)_ Price Target & 52-Week Price Range

How has CALM stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, Cal-Maine Foods has traded between the range of $38.25 and $65.32.

The current Analyst Price Target for Cal-Maine Foods is $71.22.

What is Cal-Maine Foods YOY Performance in comparison to its industry and the total market?

The YOY performance for Cal-Maine Foods is 40.63%. The Food Processing industry has a YOY performance of -2.32% in comparison to the YOY S&P 500 performance of -6.56%.

Cal-Maine Foods (CALM)_ YOY Performance in Comparison to the Food Processing Industry and the S&P 500

Recent Financial Results (Q2, 2023)

  • Record quarterly net sales of $801.7M, a 110% increase compared with the same quarter last year, driven by record average conventional egg selling price
  • Record quarterly net income of $198.6M, or $4.08 per basic and $4.07 per diluted common share
  • Quarterly gross profit margin of 39.6%
  • Cash dividend of $1.35 per share

Stock Price Target: $71.22

Company Overview

CALM Stock Rating

Cal-Maine Foods, Inc., together with its subsidiaries, produces, grades, packages, markets, and distributes shell eggs. The company offers specialty shell eggs, such as nutritionally enhanced, cage free, organic, and brown eggs under the Egg-Land’s Best, Land O’ Lakes, Farmhouse Eggs, and 4-Grain brand names, as well as under private labels. It sells its products to various customers, including national and regional grocery store chains, club stores, independent supermarkets, foodservice distributors, and egg product consumers primarily in the southwestern, southeastern, mid-western, and mid-Atlantic regions of the United States. Cal-Maine Foods, Inc. was founded in 1957 and is headquartered in Ridgeland, Mississippi.

Be sure to add Cal-Maine Foods (CALM) to your Watch List and if you haven’t done so already. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.