CAL-MAINE FOODS INC (NASDAQ:CALM) Fits Louis Navellier’s Growth Investing Criteria with Strong Earnings Momentum and Rising Sales

Louis Navellier’s The Little Book That Makes You Rich presents a growth investing method focused on finding stocks with solid earnings momentum, rising sales, and better profitability. The strategy uses eight main factors, such as upward earnings adjustments, growing margins, strong cash flow, and high return on equity. These measures help identify firms likely to maintain above-average growth, a key trait of winning growth investments. One stock that fits these ideas today is CAL-MAINE FOODS INC (NASDAQ:CALM), a top U.S. producer and distributor of shell eggs.

How CALM Matches Navellier’s Growth Standards

1. Upward Earnings Adjustments
   Analysts have increased their next-quarter EPS forecasts for CALM by 232.7% in the last three months, a clear sign that outlooks are getting better. This fits Navellier’s focus on rising revisions as a sign of potential price gains.

2. Better-Than-Expected Earnings
   CALM has topped EPS estimates in three of the past four quarters, with an average beat of 14.8%. Steady outperformance shows the firm handles expectations well, a quality Navellier notes as vital for growth stocks.

3. Rising Sales Growth
   Revenue growth stays strong, with 83.2% year-over-year (TTM) growth and 72.2% quarter-over-quarter growth. Faster sales are central to Navellier’s approach, pointing to solid demand and market strength.

4. Growing Operating Margins
   CALM’s operating margin has jumped 171.8% over the past year, showing better cost control. Navellier values margin growth as proof a company can scale profitably.

5. Solid Cash Flow Growth
   Free cash flow has risen 249.5% year-over-year, highlighting financial stability and flexibility. Strong cash flow aids reinvestment and shareholder returns, both important in growth investing.

6. Earnings Growth
   EPS growth is outstanding, with 393.1% year-over-year and 203.4% quarter-over-quarter gains. Navellier’s system prefers firms with faster earnings growth, as they often earn higher valuations.

7. Strong Earnings Momentum
   The latest quarterly EPS growth (203.4%) far exceeds the same quarter two years ago (2.2%), showing lasting momentum, a key part of Navellier’s model.

8. High Return on Equity (ROE)
   CALM’s ROE of 47.6% ranks among the best in its industry, reflecting smart use of shareholder funds. Navellier sees high ROE as a mark of top growth firms.

Additional Strengths Beyond the Criteria

CALM’s fundamental analysis report notes other positives:

• Profitability: Leading margins (28.6% net, 36.1% operating) and ROE.
• Financial Health: No debt, good liquidity (current ratio of 6.38), and regular dividends.
• Valuation: A P/E of 4.3 hints the stock may be priced low relative to earnings, though future EPS drops are expected.

Final Thoughts

CAL-MAINE FOODS INC displays many traits growth investors look for using Navellier’s standards, from earnings momentum to cost efficiency. While past results have been impressive, investors should consider future earnings forecasts and industry cycles.

For more stocks fitting this strategy, check the Little Book screener results here.

Disclaimer: This analysis is not investment advice. Do your own research or consult a financial advisor before making investment choices.