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Cal-Maine: Much More Than A Simple Egg Distributor

Cal - Maine Foods, Inc.

"To be the most sustainable producer and reliable supplier of consistent, high quality fresh eggs and egg products in the country, demonstrating a 'Culture of Sustainability' in everything we do."

Rating: Buy & Hold

Company Profile

Cal-Maine Foods, Inc. (NYSE: CALM) produces and distributes shell eggs. Although stationed in Jackson, Mississippi, CALM distributes its many specialty eggs throughout the southeastern, southwestern, mid-western, and mid-Atlantic regions of the United States. It was established in 1969 and operates under the popular Egg-Lands Best, Land O' Lake, Farmhouse, and 4-Grain brand names. Cal-Maine eggs can primarily be found in national and regional grocery chains as well as smaller club and food service stores.

Company History and Growth

In 1969, Fred Adams, owner of Adams Foods, Inc. merged with Dairy Fresh Products Company of California and Maine Egg Farms of Lewiston, ME. The newly formed company, Cal-Maine Foods, filed for an IPO in 1996. Since then, the company has grown through organic and acquisition growth to become one of the largest distributors of eggs in the country. Due to this aggressive growth strategy, CALM has successfully completed 18 mergers, maintained state of the art facilities, and since 2010, has increased the dozens of eggs sold by 200 million and increased net sales by $600 million.

Stock Information

As of December 7, 2015 CALM had the following stock information:

Market Cap. - 2.33 B

Price to Earnings Ratio - 8.41

Dividend Yield - 7.96%

Price Movement

Although over the past 2 years CALM has seen its stock price climb from roughly $28 to $48, a 70% appreciation, the recent 16% sell off presents an attractive entry point for a long position.

Qualitative Analysis

Market Environment

Over the years, U.S citizens have become increasingly more cognizant of their health. Companies like White Waves (NYSE:WWAV) and...