Stock Story -
Egg company Cal-Maine Foods (NASDAQ:CALM) beat Wall Street’s revenue expectations in Q4 CY2024, with sales up 82.5% year on year to $954.7 million. Its GAAP profit of $4.47 per share was 21.5% above analysts’ consensus estimates.
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Cal-Maine (CALM) Q4 CY2024 Highlights:
- Revenue: $954.7 million vs analyst estimates of $751.5 million (82.5% year-on-year growth, 27% beat)
- Adjusted EPS: $4.47 vs analyst estimates of $3.68 (21.5% beat)
- Operating Margin: 29.1%, up from 6.5% in the same quarter last year
- Market Capitalization: $5.14 billion
Company OverviewKnown for brands such as Egg-Land’s Best and Land O’ Lakes, Cal-Maine (NASDAQ:CALM) produces, packages, and distributes eggs.
Perishable Food
The perishable food industry is diverse, encompassing large-scale producers and distributors to specialty and artisanal brands. These companies sell produce, dairy products, meats, and baked goods and have become integral to serving modern American consumers who prioritize freshness, quality, and nutritional value. Investing in perishable food stocks presents both opportunities and challenges. While the perishable nature of products can introduce risks related to supply chain management and shelf life, it also creates a constant demand driven by the necessity for fresh food. Companies that can efficiently manage inventory, distribution, and quality control are well-positioned to thrive in this competitive market. Navigating the perishable food industry requires adherence to strict food safety standards, regulations, and labeling requirements.Sales Growth
A company’s long-term sales performance signals its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.Cal-Maine carries some recognizable products but is a mid-sized consumer staples company. Its size could bring disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale. On the other hand, it can still flex high growth rates because it’s working from a smaller revenue base.
As you can see below, Cal-Maine’s sales grew at an exceptional 29.6% compounded annual growth rate over the last three years. This shows it had good demand, a useful starting point for our analysis.
This quarter, Cal-Maine reported magnificent year-on-year revenue growth of 82.5%, and its $954.7 million of revenue beat Wall Street’s estimates by 27%.
Looking ahead, sell-side analysts expect revenue to decline by 25% over the next 12 months, a deceleration versus the last three years. This projection doesn't excite us and implies its products will see some demand headwinds.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.Cal-Maine has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the consumer staples sector, averaging 17.2% over the last two years.