CALM Weiss

7/23/2019 CALM Weiss

http://slidepdf.com/reader/full/calm-weiss 1/5

CAL-MAINE FOODS INCCALMNASDAQ:

N o v e mb e r 1 5 , 2 0 1 5

BU Y HOLD SE LL

BUYBUYBUYBUYBUYRA TI NG SIN CE 0 1/3 0/ 2012

T ARGE T PRICE $72.50A+ A A- B+ B B- C+ C C- D+ D D- E + E E - F

Annual Dividend Rate$1.27

Annual Dividend Yield2.29%

Beta0.73

Market Capitalization$ 2 .4 B i l li o n

52-Week Range$34.03-$63.25

Price as of 11/12/2015$55.24

Sector: Co n su me r N o n -Disc re tio n a ry Sub-Industry: P a c k ag e d F o o d s & M e a t s Source: S& P

This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracyor makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.

PAGE Report Date: November 15, 2015

CALM BUSIN E SS DE SCRIPT ION

Cal-Maine Foods, Inc. produces, grades, packages,markets, and distributes shell eggs. It offersspecialty shell eggs, such as nutritionallyenhanced, cage free, organic, and brown eggsunder the Egg-Land's Best, Land O' Lake,Farmhouse, and 4-Grain brand names, as well asunder private labels.

S T O C K P E R F O RM A N C E ( % )

3 Mo. 1 Yr. 3 Yr (Ann)

Price Change 2.42 32.34 37.51

GROWT H (%)Last Qtr 12 Mo. 3 Yr CAGR

Revenues 70.86 23.72 16.99

Net Income 417.16 115.93 42.28

EPS 417.54 115.87 41.74

R E TU R N O N E Q UI T Y ( % )

CALM Ind Avg S&P 500

Q1 2015 34.60 17.93 12.91

Q1 2014 20.90 23.84 14.28

Q1 2013 9.47 28.69 13.75

P/E COMPARISON

9.67

CALM

28.60

Ind Avg

21.56

S&P 500

E PS AN ALYSIS¹ ($)

2015

Q 1 2 . 9

5

2014

Q 4 0 . 9

5

Q 3 1 . 0

5 Q 2 0 . 7

6

Q 1 0 . 5 7

2013

Q 4 0 . 6 5

Q 3 0 . 8

9

Q 2 0 . 5 4

Q 1 0 . 1

8

NA = not available NM = not meaningful

1 Compustat fiscal year convention is used for all fundamentaldata items.

Weekly Price: (US$) SMA (50) SMA (100) 2 Years1 Year

2013 2014 2015

20

30

40

50

60

70

80

TARGET PRICE $72.50TARGET PRICE $72.50TARGET PRICE $72.50TARGET PRICE $72.50TARGET PRICE $72.50

Rating History

BUY

0

5

10Volume in Millions

COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History

RE COMME N DAT ION

We rate CAL-MAINE FOODS INC (CALM) a BUY. This is based on the convergence of positive investmentmeasures, which should help this stock outperform the majority of stocks that we rate. The company'sstrengths can be seen in multiple areas, such as i ts robust revenue growth, largely solid financial position

with reasonable debt levels by most measures, notable return on equity, attractive valuation levels andexpanding profit margins. Although the company may harbor some minor weaknesses, we feel they areunlikely to have a significant impact on results.

HIGHLIGHT S

CALM's very impressive revenue growth greatly exceeded the industry average of 5.2%. Since the samequarter one year prior, revenues leaped by 70.9%. Growth in the company's revenue appears to have helpedboost the earnings per share.

CALM's debt-to-equity ratio is very low at 0.05 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, CALM has a quick ratio of2.17, which demonstrates the ability of the company to cover short-term liquidity needs.

The company's current return on equity greatly increased when compared to its ROE from the same quarterone year prior. This is a signal of significant strength within the corporation. Compared to other companies in

the Food Products industry and the overall market, CAL-MAINE FOODS INC's return on equity significantlyexceeds that of both the industry average and the S&P 500.

44.95% is the gross profit margin for CAL-MAINE FOODS INC which we consider to be strong. It has increasedsignificantly from the same period last year. Along with this, the net profit margin of 23.45% is above that of the industry average.




N o v e mb e r 1 5 , 2 0 1 5

S e ct o r: C o ns u me r N o n- D i sc r et i on a ry P a ck a ge d F o od s & M e at s S o ur c e: S & P



Beta0.73


52-Week Range$34.03-$63.25

Price as of 11/12/2015$55.24



PE E R GROUP AN ALYSIS

REVENUE GROWTH AND EBITDA MARGIN*

EBITDA Margin (TTM) R e v e n u

e G r o w t h ( T T M )

- 2 0 %

2 5 %

40%0%

F A V O R A B L E

U N F A V O R A

B L E

THSTHSTHSTHSTHS

SEBSEBSEBSEBSEB

LNCELNCELNCELNCELNCE

IBAIBAIBAIBAIBA

BGSBGSBGSBGSBGSSAFMSAFMSAFMSAFMSAFM

CA LMCA LMCA LMCA LMCA LM

Companies with higher EBITDA margins andrevenue growth rates are outperforming companieswith lower EBITDA margins and revenue growthrates. Companies for this scatter plot have a marketcapitalization between $1.5 Billion and $3.6 Billion.Companies with NA or NM values do not appear.*EBITDA – Earnings Before Interest, Taxes, Depreciation andAmortization.

REVENUE GROWTH AND EARNINGS YIELD

Earnings Yield (TTM) R e v e n u e G r o w t h ( T T M )

- 2 0 %

2 5 %

20%-2.5%

F A V O R A B L E

U N F A V O R A B L E

THSTHSTHSTHSTHS

SEBSEBSEBSEBSEB

LANCLANCLANCLANCLANCLNCELNCELNCELNCELNCE

IBAIBAIBAIBAIBA

JJSFJJSFJJSFJJSFJJSFBGSBGSBGSBGSBGS

TRTRTRTRTR

DFDFDFDFDF

SAFMSAFMSAFMSAFMSAFM

CA LMCA LMCA LMCA LMCA LM

Companies that exhibit both a high earnings yieldand high revenue growth are generally moreattractive than companies with low revenue growthand low earnings yield. Companies for this scatterplot have revenue growth rates between -15.5% and23.7%. Companies with NA or NM values do notappear.

IN DUST RY AN ALYSIS

The US food products industry is dominated by a few multinational corporations like HJ Heinz (HNZ), KraftFoods (KFT), General Mills (GIS), and Kellogg (K). The entire industry, from growing to processing, is extremelycompetitive and margins are typically so low that earning profit becomes a challenge. The worldwideprocessed food industry is facing low growth rates, high energy costs and continuously changing consumerpreferences. Nonetheless, there are a few high growth segments, like health, frozen, and organic food.

Globalization has led to the rise of massive multinational food processing companies, which sell theirproducts under local names in local languages after producing them in regional factories. Taste,convenience and health continue to be the primary drivers of food choices. Growing popularity of ethnic food,including Greek, Latin, Asian, Korean, Cuban, and Japanese foods, is expected to drive demand.

Increasing health concerns are impacting all sectors within the industry as obesity levels continue to rise toalarming rates. Various branches of the US government, including the Food and Drug Administration (FDA),along with a host of consumer groups are squaring off with food producers over nutrition and theresponsibilities and ethical issues inherent in the production and marketing of food. The treatment ofagricultural animals is rapidly gaining consumer awareness and has forced a realignment of researchmethods.

The industry is being squeezed from all sides. Prices for milk, eggs, corn, wheat, oils and almost all otheredible commodities continue to surge. The prices of electricity and fuel are also increasing, makingprocessing and distribution more expensive. With high unemployment, modest inflation and weak economicgrowth, passing on the entire price hike to consumers is not an option with apprehensions of substantiallyreducing overall demand.

Brand value is gaining prominence among producers as demand is declining. Factors contributing to the risein prices include high feed prices caused by ethanol demand, less inventory with heifer calves being retainedand a possible increase in demand for exports due to a depreciating dollar. Multinational companies withdiversified customer bases are best positioned to overcome this high-price/low-demand trend. NestlÃ©, theworld's biggest food firm, and Kraft, one of America's biggest food firms, fit this description.

We expect higher input costs to negatively impact margins, leading manufacturers to seek greater production

and supply-chain efficiencies. Increased awareness and acceptance of rising food prices should lead togreater home-dining trends, stimulating brand building and niche market initiatives at major food processors.These issues, among others, will drive industry trends and M&A activity going forward.

P E E R G R O U P : F o o d P r o d uc t s

Recent Market Price/ Net Sales Net IncomeTicker Price ($)Company Name Cap ($M) Earnings TTM ($M) TTM ($M

CA LM 55 .24CAL-M AIN E F OODS I NC 2,4 14 9. 67 1,8 29.0 8 2 76.6 2

THS 84.50TREEHOUSE FOODS INC 3,642 33.01 3,244.50 111.57

SEB 3,040.50SEABOARD CORP 3,560 19.11 5,951.78 186.26

LANC 109.77LANCASTER COLONY CORP 3,004 28.22 1,138.61 106.55

LNCE 37.39SNYDERS-LANCE INC 2,647 37.77 1,689.54 69.97

IBA 50.88INDUSTRIAS BACHOCO SAB DE CV 2,544 9.90 2,579.92 256.12

JJSF 113.93J & J SNACK FOODS CORP 2,128 30.54 976.26 70.18BGS 35.88B&G FOODS INC 2,080 28.94 867.38 69.58

TR 31.79TOOTSIE ROLL INDUSTRIES INC 2,005 30.24 537.36 64.4

DF 19.06DEAN FOODS CO 1,741 NM 8,494.17 -21.7

SAFM 67.57SANDERSON FARMS INC 1,514 5.49 2,884.74 281.74

The peer group comparison is based on Major Packaged Foods & Meats companies of comparable size.




N o v e mb e r 1 5 , 2 0 1 5




Beta0.73


52-Week Range$34.03-$63.25

Price as of 11/12/2015$55.24



COMPAN Y DE SCRIPT ION

Cal-Maine Foods, Inc. produces, grades, packages,markets, and distributes shell eggs. It offers specialtyshell eggs, such as nutritionally enhanced, cage free,organic, and brown eggs under the Egg-Land's Best, LandO' Lake, Farmhouse, and 4-Grain brand names, as well asunder private labels. The company sells i ts products tovarious customers, including national and regionalgrocery store chains, club stores, foodservicedistributors, and egg product consumers primarily in thesoutheastern, southwestern, mid-western, andmid-Atlantic regions of the United States. Cal-MaineFoods, Inc. was founded in 1969 and is based in Jackson,Mississippi.

CAL-MAINE FOODS INC3320 Woodrow Wilson Avenue

Jackson, MS 39209USAPhone: 601-948-6813Fax: 601-969-0905http://www.calmainefoods.com

ST OCK-AT -A-GLAN CE

Below is a summary of the major fundamental and technical factors we consider when determining ouroverall recommendation of CALM shares. It is provided in order to give you a deeper understanding of ourrating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It isimportant to note, however, that these factors only tell part of the story. To gain an even more comprehensiveunderstanding of our stance on the stock, these factors must be assessed in combination with the stock’svaluation. Please refer to our Valuation section on page 5 for further information.

F ACT OR SCORE

Growth out of 5 stars5.0Measures the growth of both the company's income statement andcash flow. On this factor, CALM has a growth score better than 90% of the stocks we rate.

weak strong

Total Return out of 5 stars4.5

Measures the historical price movement of the stock. The stockperformance of this company has beaten 80% of the companies wecover.

weak strong

Efficiency out of 5 stars5.0Measures the strength and historic growth of a company's return oninvested capital. The company has generated more income per dollar ofcapital than 90% of the companies we review.

weak strong

Price volatility out of 5 stars4.5Measures the volatility of the company's stock price historically. Thestock is less volatile than 80% of the stocks we monitor.

weak strong

Solvency out of 5 stars5.0Measures the solvency of the company based on several ratios. Thecompany is more solvent than 90% of the companies we analyze.

weak strong

Income out of 5 stars4.0Measures dividend yield and payouts to shareholders. The company'sdividend is higher than 70% of the companies we track.

weak strong

T HE ST RE E T RAT IN GS RE SE ARCH ME T HODOLOGY

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including bothprice appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks toperform against a general benchmark of the equities market and interest rates. While our model isquantitative, it utilizes both subjective and objective elements. For instance, subjective elements includeexpected equities market returns, future interest rates, implied industry outlook and forecasted companyearnings. Objective elements include volatility of past operating revenues, financial strength, and company

cash flows.

Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdownas compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level ofacceptable volatility for highly performing stocks; the current valuation as compared to projected earningsgrowth; and the financial strength of the underlying company as compared to its stock's valuation ascompared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's performance. These and many more derived observations are then combined, ranked, weighted,and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method ofselecting stocks.




N o v e mb e r 1 5 , 2 0 1 5




Beta0.73


52-Week Range$34.03-$63.25

Price as of 11/12/2015$55.24



C o n s en s u s E P S E s t i m a t e s ² ($)

IBES consensus estimates are provided by Thomson Financial

3.10

Q2 FY15

11.40 E

2016(E)

6.75 E

2017(E)

IN COME ST AT E ME N T

Q1 FY15 Q1 FY14

Net Sales ($mil) 609.90 356.94

EBITDA ($mil) 231.17 50.53EBIT ($mil) 220.11 41.40

Net Income ($mil) 143.02 27.66

BALAN CE SHE E T

Q1 FY15 Q1 FY14

Cash & Equiv. ($mil) 355.85 210.98

Total Assets ($mil) 1,136.17 829.36

Total Debt ($mil) 42.55 58.47

Equity ($mil) 799.48 612.78

PROFIT ABILIT Y

Q1 FY15 Q1 FY14

Gross Profit Margin 44.95% 25.28%

EBITDA Margin 37.90% 14.15%

Operating Margin 36.09% 11.60%

Sales Turnover 1.61 1.78

Return on Assets 24.34% 15.44%

Return on Equity 34.60% 20.90%

DE BT

Q1 FY15 Q1 FY14

Current Ratio 2.78 3.66

Debt/Capital 0.05 0.09

Interest Expense NA 0.53

Interest Coverage NA 77.53

SHARE DAT AQ1 FY15 Q1 FY14

Shares outstanding (mil) 49 48

Div / share 0.32 0.22

EPS 2.95 0.57

Book value / share 16.48 12.67

Institutional Own % NA NA

Avg Daily Volume 983,967 802,360

2 Sum of quarterly figures may not match annual estimates due touse of median consensus estimates.

F I N A N CI A L A N A L Y SI S

CAL-MAINE FOODS INC's gross profit margin for the first quarter of its fiscal year 2015 has significantlyincreased when compared to the same period a year ago. The company has grown sales and net incomesignificantly, outpacing the average growth rates of competitors within its industry. CAL-MAINE FOODS INCis extremely liquid. Currently, the Quick Ratio is 2.17 which clearly shows the ability to cover any short-termcash needs. The company's liquidity has decreased from the same period last year.

At the same time, stockholders' equity ("net worth") has greatly increased by 30.46% from the same quarterlast year. Overall, the key liquidity measurements indicate that the company is very unlikely to face financialdifficulties in the near future.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in thenext 12-months. To learn more visit www.TheStreetRatings.com.




N o v e mb e r 1 5 , 2 0 1 5




Beta0.73


52-Week Range$34.03-$63.25

Price as of 11/12/2015$55.24



RAT IN GS HIST ORY

Our rating for CAL-MAINE FOODS INC has notchanged since 1/30/2012. As of 11/12/2015, thestock was trading at a price of $55.24 which is12.7% below its 52-week high of $63.25 and 62.3%above its 52-week low of $34.03.

2 Year Chart

2014

$50

$75

B U Y : $ 2 5 . 9

7

MOST RE CEN T RAT IN GS CHANGE S

Date Price Action From To

11/12/13 $25.97 No Change Buy Buy

Price reflects the closing price as of the date listed, if available

RAT IN GS DE FIN IT ION S &D I S T R IB U T I O N O F T H E S TR E E T R A T I NG S

(as of 11/12/2015)

39.39% Bu y - We believe that this s tock has theopportunity to appreciate and produce a total return ofmore than 10% over the next 12 months.

32.35% Ho ld - We do not believe this stock offersconclusive evidence to warrant the purchase or sale ofshares at this time and that its likelihood of positive totalreturn is roughly in balance with the risk of loss.

28.26% Se ll - We believe that this stock is likely todecline by more than 10% over the next 12 months, withthe risk involved too great to compensate for anypossible returns.

TheStreet Ratings1 4 W a ll S t r ee t , 1 5 th F l o orN e w Y o r k , N Y 1 0 00 5www.thestreet.com

Research Contact: 212-321-5381Sales Contact: 866-321-8726

VALUAT ION

BUY. CAL-MAINE FOODS INC's P/E ratio indicates a significant discount compared to an average of 28.60 for the Food Products industry and a significant discount compared to the S&P 500 average of 21.56. Conductinga second comparison, its price-to-book ratio of 3.35 indicates a premium versus the S&P 500 average of 2.72and a significant discount versus the industry average of 5.49. The price-to-sales ratio is below the S&P 500average and is well below the industry average, indicating a discount. Upon assessment of these and otherkey valuation criteria, CAL-MAINE FOODS INC proves to trade at a discount to investment alternatives within the industry.

1 2 3 4 5Price/Earningspremium discount

CA LM 9 .67 Pe ers 28.6 0

• Discount. A lower P/E ratio than its peers cansignify a less expensive stock or lower growthexpectations.

• CALM is trading at a significant discount to its

peers.

1 2 3 4 5Price/CashFlowpremium discount

CAL M 8. 60 Pee rs 33 .20

• Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is usefulfor comparing companies with different capitalrequirements or financing structures.

• CALM is trading at a significant discount to itspeers.

1 2 3 4 5Price/Projected Earningspremium discount

CA LM 8 .18 Pe ers 23.1 2

• Discount. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock orlower future growth expectations.


1 2 3 4 5Price to Earnings/Growthpremium discount

CAL M 0. 04 Pe ers 1.29

• Discount. The PEG ratio is the stock’s P/E dividedby the consensus estimate of long-term earningsgrowth. Faster growth can justify higher pricemultiples.

• CALM trades at a significant discount to its peers.

1 2 3 4 5Price/Bookpremium discount

CA LM 3 .35 Pee rs 5. 49

• Discount. A lower price-to-book ratio makes a

stock more attractive to investors seeking stockswith lower market values per dollar of equity on thebalance sheet.


1 2 3 4 5Earnings Growthlower higher

CAL M 11 5.87 Pe ers 109. 70

• Average. Elevated earnings growth rates can lead

to capital appreciation and justify higherprice-to-earnings ratios.• CALM is expected to keep pace with its peers on the basis of earnings growth.

1 2 3 4 5Price/Salespremium discount

CA LM 1 .46 Pee rs 2. 77

• Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the valueinvestors are placing on each dollar of sales.

• CALM is trading at a significant discount to itsindustry on this measurement.

1 2 3 4 5Sales Growthlower higher

CAL M 23 .72 Pee rs -0.6 9

• Higher. A sales growth rate that exceeds theindustry implies that a company is gaining marketshare.

• CALM has a sales growth rate that significantlyexceeds its peers.

DISCLAIMER:

The opinions and information contained herein have been obtained or derived from sources believed to be reliable, butTheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is providedvia the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well asother third-party data providers.

TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is providedfor informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities orother investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of aqualified securities professional, before you make any investment. None of the information contained in this report constitutes,or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or adetermination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to theinvestment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found athttp://www.thestreet.com/static/about/terms-of-use.html.

Documents

CALM Weiss