Shares in Cal-Maine Foods leaped to a six-year high after the world’s egg producer revealed a jump in revenues and earnings encouraged by higher prices, which outpaced even the growth in feed costs.
Cal-Maine Foods shares rose by 9.7% to $57.00 in early deals in New York, their highest since late 2015, and taking above 50% their headway for this year so far.
Wednesday’s gain followed the release of results showing a tripling to $39.5m in earnings for the group’s third quarter, as ended on February 26.
Earnings per share, at $0.81, came in $0.02 short of market expectations.
However, Cal-Maine’s figures included a marked reversal in the tax position, to a charge of $13.6m, compared with a rebate of $1.72m a year before, and heralded the return of a dividend for the first time in seven quarters.
Revenues, up 33% at a company record for the quarter of $477.5m, exceeded the $468.8m that investors had pencilled in, according to a Refinitiv poll.
The revenue growth was “driven by improved shell egg pricing”, Cal-Maine said, reporting an increase of 29% year on year to $1.612 per dozen in its average selling price.
Average feed costs, although inflated by soaring corn prices, rose by a more modest 20% to $0.562 per dozen.
The group’s gross margin rose by some 0.6 points year on year to 19.2% thanks to “overall improved market conditions, strong growth in our specialty egg sales, our continued focus on expense management and our ability to leverage our owned production capabilities”, said Dolph Baker, the Cal-Maine chairman and chief executive.
While retail demand for eggs had eased from Covid highs, “with improving demand for food service breaking stock, overall demand is returning to a more consistent, historical pattern”.
The group also reported a 2.4% increase in shell egg volumes.
The US Department of Agriculture earlier this month lifted its estimates for US egg prices for both the first and second quarters of 2022, citing lower production growth than had been expected, in the face of “higher expected production costs and slow expansion of the layer flock”.
Cal-Maine reported a dividend of $0.125 per share, to be paid in May.