Over the last six months, Cal-Maine’s shares have sunk to $86.24, producing a disappointing 15.5% loss - a stark contrast to the S&P 500’s 13% gain. This was partly driven by its softer quarterly results and might have investors contemplating their next move.
Following the drawdown, is now a good time to buy CALM? Find out in our full research report, it’s free for active Edge members.
Why Are We Positive On CALM?
Known for brands such as Egg-Land’s Best and Land O’ Lakes, Cal-Maine (NASDAQ: CALM) produces, packages, and distributes eggs.
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Luckily, Cal-Maine’s sales grew at an exceptional 27.7% compounded annual growth rate over the last three years. Its growth surpassed the average consumer staples company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Cal-Maine’s EPS grew at an astounding 66.4% compounded annual growth rate over the last three years, higher than its 27.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential
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, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition. The company’s free cash flow margin was among the best in the consumer staples sector, averaging 22.7% over the last two years.
Final Judgment
These are just a few reasons why we think Cal-Maine is a high-quality business. With the recent decline, the stock trades at 12.6× forward P/E (or $86.24 per share). Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free for active Edge members.
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