CAL-MAINE FOODS INC (NASDAQ:CALM) – A Potentially Undervalued Stock with Strong Fundamentals

CAL-MAINE FOODS INC (NASDAQ:CALM) was identified by our stock screener as a decent value candidate. The company, a leading producer and distributor of shell eggs, stands out with strong profitability, financial health, and an attractive valuation. Here’s why CALM may be worth a closer look for value investors.

Valuation

CALM’s valuation metrics suggest the stock is priced conservatively compared to its fundamentals:

• P/E Ratio of 4.64 – Significantly below both the industry average (18.16) and the S&P 500 (24.95).
• Enterprise Value/EBITDA – Ranks cheaper than 92% of its peers in the food products industry.
• Price/Free Cash Flow – More favorable than nearly 90% of competitors.

Despite an expected earnings decline in the near term, the stock’s low valuation provides a margin of safety.

Financial Health

The company maintains a robust balance sheet:

• No Debt – A rare strength, eliminating solvency risks.
• Current Ratio of 3.86 & Quick Ratio of 3.26 – Well above industry averages, indicating strong liquidity.
• Altman-Z Score of 8.09 – Far above the threshold for financial distress.

Profitability

CALM excels in profitability metrics:

• Return on Assets (32.15%) & Return on Equity (41.60%) – Among the top performers in its sector.
• Operating Margin of 32.33% – Outperforming nearly 99% of industry peers.
• Consistent Earnings & Cash Flow – Positive results over the past five years.

Growth & Dividend

While future growth projections are modest, past performance has been strong:

• EPS Growth (303.79% YoY) & Revenue Growth (60.01% YoY) – Exceptional recent performance.
• Dividend Yield of 15.41% – One of the highest in the market, with a sustainable payout ratio (21.16%).

For a deeper dive, review the full fundamental report for CALM.

Our Decent Value Stocks screener lists more stocks with strong valuations and solid fundamentals.

Disclaimer

This is not investment advice. The observations here are based on available data, but investors should conduct their own research before making decisions.