Cal-Maine Foods, Inc. (CALM)
The Company is in the business of producing, grading, packaging, marketing and distribution of shell eggs.
Recs
foolishfoolhead1
(52.67)
Submitted: 11/15/2009 7:31:45 PM :
Start Price:
$26.07
CALM Score:
+8.62
everyone needs eggs
Recs
PJR02
(47.52)
Submitted: 11/13/2009 12:03:41 PM :
Start Price:
$25.99
CALM Score:
+8.30
Once they overcome present weaknesses (dec revenue, increasing debt), expect some substantial improvement by next spring
Recs
BoringTortoise
(42.09)
Submitted: 11/1/2009 4:22:45 PM :
Start Price:
$27.15
CALM Score:
-1.75
This account tracks the less exciting stocks from my watch list - companies that are easy to understand with clean balance sheets and good track records in relatively straight-forward industries.
Recs
ceejayoh
(84.57)
Submitted: 10/16/2009 10:31:38 AM :
Start Price:
$25.73
CALM Score:
+8.27
Good balance sheet, insider ownership, good p/e
Recs
NewlyMinted4Star
(< 20)
Submitted: 10/8/2009 5:50:49 PM :
Start Price:
$25.25
CALM Score:
+8.63
This account tracks the performance of newly minted 4 star stocks - 3 star stocks that recently turned in to 4 star stocks.
Recs
00100
(96.46)
Submitted: 9/25/2009 2:40:27 PM :
Start Price:
$27.79
CALM Score:
-3.53
Upthumb. Excellent cash flow. Upthumb. Free cash flow is negative. Good payout. 16% sales growth over 5 years. 1.2 Quick ratio. Low to nominal debt ratio. High gross margins. Good valuation.
Recs
imathebron
(50.11)
Submitted: 8/1/2009 10:14:25 AM :
Start Price:
$29.51
CALM Score:
-15.18
People have to eat and eggs will remain a staple.
Recs
SarahGen
(99.83)
Submitted: 7/29/2009 12:37:08 PM :
Start Price:
$27.84
CALM Score:
-12.30
solid dividend play - sold off too much after earnings
Recs
mpendragon
(95.13)
Submitted: 7/2/2009 1:41:19 PM :
Start Price:
$24.97
CALM Score:
-9.66
This company has had a lot of growth, good margins, a realistic P/E, they are in an industry that's resilient to economic problems, and doesn’t have much international competition. My main reservations about this company have to do with future fuel and grain costs issues.
Recs
srk85
(88.86)
Submitted: 7/1/2009 3:32:12 PM :
Start Price:
$25.34
CALM Score:
-10.06
Quite undervalued compared to industry. Returns (ROIC) are also quite favorable.
Recs
nofunnogain
(< 20)
Submitted: 6/27/2009 5:25:45 PM :
Start Price:
$25.29
CALM Score:
-8.46
Proven past performance and undervalue
Recs
tdh474
(21.68)
Submitted: 6/26/2009 1:43:21 PM :
Start Price:
$24.81
CALM Score:
-4.98
Can't seem to find anything wrong with this one. Great dividend, outstanding P/E, low debt. The only thing that may be wrong is that they don't give an estimate of their upcoming quarter. Hard to predict in a fluctuating commodity such as eggs. Added it to my son's college portfolio, long term 10 year hold here!
Recs
kakkineni
(32.02)
Submitted: 6/11/2009 12:00:48 PM :
Start Price:
$22.80
CALM Score:
+6.95
Great valuation
Recs
toolboy2
(98.05)
Submitted: 6/3/2009 9:40:44 PM :
Start Price:
$23.88
CALM Score:
-5.78
Profit margins blow away competition with tasty dividend!!!
But, beans are better than eggs...
wallstreetbean.com
Recs
PeeDaPants
(42.35)
Submitted: 5/15/2009 11:37:15 PM :
Start Price:
$22.18
CALM Score:
+3.09
strong fundamentals, I know nothing about this company, just tryin out some new screens to see how the results are doing.
Recs
jmt587
(99.82)
Submitted: 5/14/2009 4:50:39 PM :
Start Price:
$23.91
CALM Score:
+39.24
Fried eggs are delicious.
Recs
SmallCapsInvstr
(83.77)
Submitted: 4/29/2009 8:45:59 PM :
Start Price:
$26.53
CALM Score:
-22.32
New to investing in equities so take this for what it's worth...
Why I Like This Company:
I like eggs. Most everyone I know likes eggs. Tons of people I don't know like eggs. People will like eggs long after I'm gone.
I don't know a ton about the egg business, but it's hard for me to figure out how a new company could easily eat up market share. So if you are going to invest in eggs, why not invest in the leader?
I LOVE companies who's CEO has been there since day 1.
I really like their dividend payout policy. If they make money, owners get a bonus (div), if they don't owners don't. From what I have read egg prices/sales can have a big effect on bottom line that is out of the executives control.
More cash then debt and a relatively low debt/equity.
High ROE. High (but not excessive) insider ownership.
Estimated EPS of 4.34 gives it a PE of 6.14 for 2009, and an estimate of 5.57 gives it a PE of 4.76 for 2010
Concerns About This Company:
The uncertainty in egg prices concerns me.
Profit margin is a little low for my tastes.
The web site looks like it was built in the 70's...wait, they didn't have web sites in the 70's :P
Overall:
I can't find enough to persuade me from buying into this company. Even if the estimates are somewhat high this still has plenty of value going forward. People don't stop buying eggs and this company is at the top of the egg food chain (weak pun intended).
I will be adding this to my real world portfolio.
Recs
elvisbeatlesfan
(84.83)
Submitted: 4/14/2009 10:39:59 PM :
Start Price:
$23.67
CALM Score:
-13.42
I am the eggman...they are the eggmen....
Recs
dwot
(99.98)
Submitted: 3/30/2009 8:36:42 PM :
Start Price:
$22.03
CALM Score:
-11.71
I seriously have not looked closely at this one for potential problems, so I may be missing the obvious as I have not looked.
I tend to think people eat more eggs when the economy gets tougher because they are cheaper and this one is trading at about 1/3rd of its 52 week high so it has been beaten back.
Recs
notzia
(76.92)
Submitted: 3/27/2009 1:26:33 PM :
Start Price:
$28.67
CALM Score:
-26.09
Even though I heard Cramer give this stock a buy, I didn’t look at it until I noticed it was also a Magic Formula pick. After running it through my valuation spreadsheets, the stock still looked good, so I gave it a recommendation. The analysis presented is based on a current price of $23.78.
I have one major problem choosing this stock for my real portfolio, and that is it doesn’t have consistently growing earnings. In fact, in the past 8 years, CALM reported negative earnings in 3 of those years. Additionally, most of the earnings growth has occurred in the last year. For these reasons I regard the stock as speculative. Nonetheless, the compounded annual growth (CAGR) has been 56%.
The company has $105 M in debt, but has maintained a current ratio (current assets/current liabilities) of about 2 for the last 5 years and currently has about $26 M in cash. To further evaluate financial safety, I looked at three general indicators. For this stock, two are well within safe boundaries, while the third is on a cautionary borderline. The Altman Z is 5.27 and is the one that is cautionary; below 1.8 is risky, above 3 is the safe range. The Piotroski F is 3; 2 or below indicates caution, while 8 or 9 indicates that the stock is expected to rise within the next year. The Sloan accrual is -1.4; 5 or higher is high risk, while -5 or lower is excellent.
I use more than one valuation method to gauge intrinsic value. The first three are standards in the valuation literature; all of the standards provide a substantial margin of safety (MOS). The estimate based on Graham’s formula was $229 (90% MOS). The Earnings Power Value (value of the firm) was estimated, on a per share bases, to be $525 (95% MOS). The Discounted Cash Flow estimate valued the stock at $100 (76% MOS).
The last two were based on a spreadsheet found on the AAII website; these are designed to mimic Buffett’s valuation methodology. One is based on projecting EPS growth 10 years into the future based on past EPS growth; I discount the resulting valuation to reflect the price at which the stock will realize a compounded earnings (including dividends when applicable) return of 15%. Based on this method the target purchase needs to be below $73(this is the maximum target price to assure a compounded return of 15%).
The second is based on estimating EPS growth through the sustainable growth rate. The per-share projected book value is estimated by taking the previous year’s book value, adding EPS and subtracting dividends (when applicable). The projected EPS is estimated by multiplying the projected book value by the average Return on Equity, and the projected dividend is estimated by multiplying the projected EPS by the average payout ratio. I then discount the resulting valuation to reflect the price at which the stock will realize a compounded earnings return of 15%. Based on this method the target purchase price needs to be below $58 (this is the maximum target price to assure a compounded return of 15%).
CALM rates to be a buy based on fundamentals, indicators of safety, and valuation, but regard the earnings pattern to be a matter of concern.
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