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 stock, combining an attractive valuation with solid profitability, financial health, and growth potential. The company, a leading producer and distributor of shell eggs, stands out in its industry with strong fundamentals.

Valuation

CALM’s valuation metrics suggest the stock is priced attractively:

• P/E Ratio of 4.91 – Significantly below both the industry average (32.97) and the S&P500 (26.69).
• Price/Forward Earnings of 11.52 – Also below the broader market average, indicating reasonable expectations.
• Enterprise Value/EBITDA – Among the lowest in its industry, with 98.89% of peers trading at higher multiples.

These figures point to a stock that may be undervalued relative to its earnings and cash flow generation.

Financial Health

The company demonstrates excellent financial stability:

• No Debt – A rare strength, eliminating interest expense risk and improving resilience.
• Current Ratio of 3.86 & Quick Ratio of 3.26 – Well above industry averages, reflecting strong liquidity.
• Altman-Z Score of 8.31 – Far above the safety threshold, indicating minimal bankruptcy risk.

Profitability

CALM’s profitability metrics are exceptional:

• Return on Equity (41.60%) and Return on Assets (32.15%) – Both rank near the top of the industry.
• Operating Margin of 32.33% – Outperforming all peers in the food products sector.
• Consistent Earnings Growth – EPS has grown at an annualized rate of 34.26% over recent years.

Growth & Dividend

While future earnings growth is expected to slow, past performance remains strong:

• Revenue Growth (60.01% YoY) – Driven by strong demand in the egg market.
• Dividend Yield of 13.56% – Far exceeding industry and S&P500 averages, with a sustainable payout ratio.

Our Decent Value Stocks screener lists more stocks with similar characteristics. For a deeper look, review the full fundamental report on CALM.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should conduct your own analysis before making investment decisions.