Reasons why Cal-Maine Foods stock is soaring today

Kalman Foods firms(Cal–Maine Foods NASDAQ Resonancestock (market)(Code: CALM)Shares of the egg producer climbed as high as 7.21 TP3T Wednesday morning, before stabilizing and closing up 3.61 TP3T after the egg producer reported better-than-expected quarterly results, which came despite news of a new outbreak of avian influenza at one of the company's plants.

Cal-Maine Foods' quarterly performance better than expected

For the third quarter ended March 2, 2024, Cal-Maine Foods reported a year-over-year decline in revenue of 29.51 TP3T to $703.1 million, with net income of $146.7 million and carries EPS of $3 (down from $6.62 EPS in the same period last year). Analysts' average estimate was for EPS of $2.46 on revenue of nearly $692 million.

A deeper analysis of its business performance shows that the decline in the company's revenue was entirely caused by the decline in average selling price. In the third quarter of last year, egg prices hit record highs due to supply chain challenges and multiple avian flu outbreaks across the country. Net average selling price per dozen eggs in the quarter was $2.152, a decrease of 41.51 TP3T from the same period last year, but record quarterly volume improved overall sales and revenues on an aggregate basis.

What's next for Cal-Maine Foods investors?

In conjunction with its quarterly business results announcement, Cal-Maine Foods also announced that one of its plants in Texas had tested positive for avian influenza. As a result, the company was forced to "cull" 1.6 million laying hens and 337,000 chicks-which, as of March 2, 2024, accounted for an aggregate total of about 3.61 TP3T of the flock. The company said it has temporarily halted production at the plant, and is working to ensure that production at its other plants is minimized. The company indicated that it had temporarily suspended production at the plant and was working to ensure production at the other plants in order to minimize the impact on its customers.

Cal-Maine says that from November 2023 through January 2024, the U.S. Department of Agriculture (USDA) Animal and Plant Health Inspection Agency (APHIS) says that about 15.7 million commercial laying hens and pullets were culled due to the national outbreak of avian influenza.

While Cal-Maine clearly wants to minimize its impact on the national egg flock, it's no surprise that the company's stock bounced back today given its better-than-expected quarterly results and the prospect of a possible near-term increase in egg prices.

Should you invest $1,000 in Cal-Maine Foods now?

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Steve Symington does not own any of the stocks listed above.The Motley Fool holds a recommendation for Cal-Maine Foods.The Motley Fool has a disclosure policy.

Why is Cal-Maine Foods Stock Soaring Today?