It's been a good week for Cal-Maine Foods, Inc. (NASDAQ:CALM) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.7% to US$62.80. It looks like a credible result overall - although revenues of US$703m were what the analysts expected, Cal-Maine Foods surprised by delivering a (statutory) profit of US$3.00 per share, an impressive 22% above what was forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
NasdaqGS:CALM Earnings and Revenue Growth April 5th 2024
After the latest results, the consensus from Cal-Maine Foods' twin analysts is for revenues of US$1.97b in 2025, which would reflect an uncomfortable 17% decline in revenue compared to the last year of performance. Statutory earnings per share are forecast to plunge 56% to US$2.45 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.95b and earnings per share (EPS) of US$2.16 in 2025. Although the revenue estimates have not really changed, we can see there's been a substantial gain in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
The consensus price target rose 6.2% to US$57.33, suggesting that higher earnings estimates flow through to the stock's valuation as well.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 14% annualised decline to the end of 2025. That is a notable change from historical growth of 19% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 2.7% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Cal-Maine Foods is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Cal-Maine Foods' earnings potential next year. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Cal-Maine Foods going out as far as 2026, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 4 warning signs for Cal-Maine Foods (1 is significant!) that you need to be mindful of.
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