Cal-Maine Bottom line Lags in 3Q - Analyst Blog
March 28 2012 - 4:00AM
Zacks
Cal-Maine Foods
Inc. (CALM) posted third-quarter 2012 adjusted earnings of
$1.09 per share, which fell short of the Zacks Consensus Estimate
of $1.14 per share. Reported earnings also deteriorated from the
year-ago level of $1.40. The year-over-year decline in earnings was
attributable to lower profit.
Inside the Headline
Numbers
Total revenue, in the quarter under
review, grew 10.6% year over year to $303.7 million. The upswing
resulted from strong retail demand for eggs as well as higher
average selling prices.
The largest U.S. producer and
distributor of fresh-shell eggs stated that demand for eggs at the
retail level remained very strong during the holidays. However,
prices came down about 35% in the post-holiday period owing to
slower seasonal demand and warmer weather.
Net average selling prices for
shell eggs increased 3.3% year over year, and sales of specialty
eggs accounted for 23.8% of shell egg revenue in the third quarter
and 16.8% of total dozen eggs sold.
Specialty eggs, which have higher
selling prices, continued to see improved sales and accounted for
16.8% of total dozens sold compared with 17.5% in the year-ago
period.
Gross profit dipped 0.8% from the
prior-year quarter to $65.1 million, mainly due to the hike in feed
cost. During the quarter, feed cost climbed 11.1% to nearly 45
cents per dozen compared with the third quarter of fiscal 2012, on
the back of higher corn and soybean prices. Operating income
declined 10.3% year over year to $34.9 million.
Financial
Position
Cal-Maine ended the quarter with
cash and short-term investment of $225.7 million, long-term debt of
$67.5 million and shareholders’ equity of $453.6 million.
Our Take
Jackson, Mississippi-based
Cal-Maine engages in production, grading, packaging, marketing and
distribution of shell eggs primarily in about 29 states across the
southwestern, southeastern, mid-western and mid-Atlantic regions of
the U.S.
The company has been struggling
with slower growth in earnings and margin pressure for some time.
While the company turned around in second-quarter 2012, its
earnings again lacked luster in the quarter under review. Feed
costs continued to hurt the company’s production costs. Management
predicts feed costs to remain high and volatile for the rest of the
fiscal year. However, revenue growth momentum continued on strong
retail demand.
Cal-Maine Foods currently retains a
Zacks #3 Rank, which translates into a short-term Hold rating.
Cal-Maine faces intense competition from BRF - Brasil Foods
S.A. (BRFS).
BRF-BRASIL FOOD (BRFS): Free Stock Analysis Report
CAL-MAINE FOODS (CALM): Free Stock Analysis Report
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