Caution on CALM. I'm working on another "napkin estimate," but here are the underlying facts that should give you pause:
The average egg cost in Q4 '15 was $1.48. In Q4 '16, 69¢. Not surprisingly, CALM reported a loss for the quarter.
I haven't had enough time to pay much attention to the (stock) market lately, so I grabbed a cheat from the Market Realist. While I will assume the numbers they offer are correct for the recent past, I can say with certainty that their report does not reflect current reality.
Two things cause me great worry; Q4 egg prices as reported by CALM were down 22%. The actual egg market was down 53%. What this tells me is that CALM did not fully participate in the overnight rise in egg prices last May. This is not entirely surprising, but it is a good thing to know; CALM lacks a certain amount of pricing power.
The second thing is this little tidbit: egg prices in Q1 to date. 2015; $2.07. This year: 59¢. Note that 59¢ is significantly less than 69¢, and at 69¢ CALM lost money. The second and a half thing; egg prices actually went up for a couple of weeks. But, uh...last week they were 48¢. There is only a month left in this quarter, so I'm going to be optimistic and suggest that the full quarter average egg price will be about 60¢ vs. last year when they were $2.24.
A most valuable lesson, one I rarely (actually never) have had is access to "(not really) inside information," which I can use to evaluate what is being written by very smart people who are evaluating this stock. Either they aren't paying attention to Urner-Barry, which is a no-brainer, or they have a pernicious agenda. For anybody to suggest that CALM might be a good buy here is extremely ignorant of the basic facts I have offered up.
To those in search of a decent dividend, perhaps (probably) many have stuck with CALM to "see what happens." After all, this is not the first time they've not paid a quarterly dividend. But I predict a second losing quarter, and again no dividend. At some point in the next few months, people will be fleeing from this stock.
I promise more detail and an actual earnings prediction when I can find time. But I can predict with great conviction a losing Q1.
who is going to buy CALM again...but not for a while. [more]