Cal-Maine Foods stock pops on strong demand for eggs

Cal-Maine Foods stock surges amid reports of record revenue and elevated demand for eggs.

Video Transcript

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RACHELLE AKUFFO: So Cal-Maine Foods, CALM, is my pick. Now, this is the largest egg supplier in the US. And they reported some sunny results for Q1, as it topped Wall Street expectations. Though, falling during the afternoon, though. We see it's down just shy of 1%.

But this actually does mark five consecutive quarters of accelerating earnings growth for the company. They sold a record $1.1 billion shell eggs in fiscal 2022, and revenue rose 3% to $1.8 billion. Now, of course, all of us were recently talking about egg prices jumping 155% since the pandemic.

There was also an outbreak of bird flu affecting about 35 million egg-laying chickens last year. And that of course, lowered overall egg production, tightening supplies even more and pushing prices up further on top of what we're already seeing with food inflation.

As we take a look at some of the headwinds, though, from Cal-Maine, those are coming from rising production costs. Those are up 21%, as feed ingredient prices-- corn and soybean meal-- also remain volatile. But we have seen at least some relief for consumers. Egg prices have started to come down as the egg-laying population is starting to pick back up, Seana.

SEANA SMITH: Yeah, Rachelle, record revenue here for the company. Specialty egg sales up 35%. Sales of cage-free eggs up 58%. Bank of America, though, lowering its price target on the stock to $50 from $55. Today it's trading at $60 there. So some on the Street thinking the stock has a little bit further to drop. And probably because of some of those headwinds that you were just mentioning.