Cal-Maine Foods, Inc. (CALM): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/CALM

Headline

Field	Value
Ticker	CALM
Company	Cal-Maine Foods, Inc.
Sector / Industry	Basic Materials
Current price	$94.55/sh
Composition	Conventional Shell Egg 45% / Specialty Shell Egg 36% / Prepared Foods 8% / Other - segment sales 11%

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	whole-company
Operating margin (value-band context)	7.2%
Operating margin today	24.4%
Margin compression (value-band)	-17.2pp
Multiple paid	5x operating income

The operating-margin figure is value-band context at year 4: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 8% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range

Reference	Value
vs own history	-0.28σ
cohort percentile (of 80 peers)	0
implied end-window share	0%

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	0.60x	5	justifies
Earnings	0.59x	4	justifies
Relative	0.42x	5	justifies
Growth	0.81x	4	justifies

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.0%); the inversion above states its own rate.

Per-Model Detail (n=18)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$306.12	0.31x	yes	FCF base $0.7B, growth 4% (input: historical growth), terminal g 4.0%, WACC 9.0%, 5yr projection
DCF Exit Multiple	Growth	$137.40	0.69x	yes	Exit EV/EBITDA: 4.0x / 4.9x / 6.9x (bear / base = today's held flat / bull), 5yr
Relative Valuation	Relative	$188.68	0.50x	yes	P/E 13.38x (blended: static sector reference 18x + trailing (TTM) 6x), scenarios: 11.3x / 13.4x / 15.5x (bear / base = reference held flat / bull), EV/EBITDA 9.17x
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	$102.49	0.92x	yes	Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess Return	Asset	$158.47	0.60x	yes	BV/sh $56.95, ROE (TTM) 25.7%, ke 9.3%
Two-Stage Excess Return	Asset	$266.63	0.35x	yes	5yr excess ROE then converge to ke=9.3%
Discounted Future Market Cap	Growth	$70.59	1.34x	yes	Rev $3.5B, growth 4% (input: historical growth; tapered), Terminal P/S: 1.1x / 1.3x / 1.5x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair Value	Relative	$344.23	0.27x	yes	EPS $14.35, growth 24% (input: historical EPS growth), PEG=0.27 (Undervalued)
Margin Trajectory	Growth	—	—	no	—
Earnings Power Value	Earnings	$141.48	0.67x	yes	Normalized EBIT (5y avg op income, one-time charges added back) $0.67B × (1−12%) / WACC 9.0% → EPV (no growth)
Residual Income	Asset	$235.51	0.40x	yes	BV $56.95 + 5yr PV of (ROE (TTM) 25.7% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham Number	Asset	$135.60	0.70x	yes	√(22.5 × EPS $14.35 × BVPS $56.95) — Graham's conservative floor
EV/EBITDA Relative	Relative	$224.98	0.42x	yes	EBITDA $0.87B × sector EV/EBITDA 12.0x
FCF Yield	Earnings	$167.90	0.56x	yes	FCF $720.4M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF Yield	Earnings	—	—	no	—
Ben Graham Formula	Earnings	$463.03	0.20x	yes	EPS $14.35 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/B	Asset	$7.89	11.98x	yes	BV $56.95 × (ROIC 1.2% / WACC 9.0%)
P/Sales Sector	Relative	$182.58	0.52x	yes	Revenue $3.46B × sector P/S 2.5x
PEG Fair Value	Relative	$516.34	0.18x	yes	EPS $14.35 × (PEG 1.5 × growth 24.0% (input: historical EPS growth)) → PE 36.0x
Earnings Yield	Earnings	$155.14	0.61x	yes	EPS $14.35 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$1.2b
Net debt / NOPAT (after-tax)	-1.55x (net cash)
Net debt / operating income (pre-tax)	-1.36x (net cash)
Share count CAGR (buyback)	-0.8%
Burning cash	no

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• About 81% of revenue comes from shell eggs split across two very different markets, a conventional line priced off daily commodity quotes and a specialty line negotiated directly with grocers, and the annual report is explicit that "specialty shell egg prices typically do not fluctuate as much as conventional shell egg prices".
• The down-cycle arrived hard in the year just closed: "Net cash provided by operating activities was $479.8 million for fiscal 2026, compared to $1.2 billion for fiscal 2025."
• The dividend is the cleanest tell on what happens next, because the payout is a fixed slice of each quarter's profit and, after a loss, the company "will not pay a dividend for a subsequent profitable quarter until the Company is profitable on a cumulative basis".

Bull Case

Start with an unusual fact about where the price sits. Run the standard lenses across this business, asset value, earnings power, peer multiples, forward cash flows, and all four land above today's quote. Peer multiples land furthest above it and the growth-oriented cash-flow work lands closest, but none of them has to reach up to meet the price. Whatever a buyer is underwriting here, it is not growth.

What they are buying is a shell egg producer that has quietly become a three-part company. The fiscal 2026 filing states that "the Company determined its operations are organized into three reportable operating segments: (1) Conventional Shell Eggs; (2) Specialty Shell Eggs; and (3) Prepared Foods". Conventional shells carry roughly 45% of revenue, specialty shells about 36%, and prepared foods around 8%. The split matters more than it looks. Conventional eggs are a pure commodity: the price is set in a quoted market, and Cal-Maine takes it. Specialty eggs, meaning cage-free and organic and branded product, are sold on negotiated terms, and the company describes the reason plainly: "Historically, prices for specialty shell eggs have generally been higher due to customer and consumer willingness to pay more".

That negotiated line is doing exactly what it is supposed to do in a bad year. Specialty prices fell 9.5% in fiscal 2026, costing $112.6 million of net sales, and specialty volumes rose 2.4%, adding $28.1 million back. A single-digit decline of that size, with volume rising against it, is a mild outcome for a protein business in a down cycle, and it is a different animal from what happened on the conventional side, where the decline was steep enough to cut consolidated operating cash flow by more than half.

The third leg is newer and the numbers are already meaningful. "In fiscal 2026, prepared foods accounted for $244.8 million or 8.4% of our net sales." Almost all of that arrived through the Echo Lake acquisition, which the filing sizes precisely: "Echo Lake Foods constituted 9.7% of total assets as of May 30, 2026, and 7.8% of total net sales for fiscal year 2026." Prepared foods is where an egg goes to stop being a commodity. A hard-cooked egg sold to a foodservice customer under contract does not reprice every week the way a case of shells does, and management has been explicit that reducing earnings volatility is part of the acquisition logic.

Then there is the balance sheet, which is close to the simplest one in the sector. The company runs a revolver and does not use it: "No amounts were outstanding under the Credit Facility during fiscal 2026 or fiscal 2025." There is no funded debt to refinance, no covenant to trip, and no interest bill competing with the feed bill. Share count has drifted down about 0.8% a year over the last four years, which is buyback deployment showing up in the one place it cannot be faked. A commodity producer with no borrowings can sit out a bad cycle rather than being forced to sell into it, and Cal-Maine has just demonstrated that it does not have to do anything at all in a down year except wait.

The bear will point out, correctly, that waiting is not a strategy and that the trailing numbers making this look cheap belong to a period the company has already left behind. Both are fair. The bull answer is that the market has already marked the earnings down, and then some: the price today implies a business earning protein-processor margins, not egg-boom margins, which is a bar this company has cleared through every prior cycle.

Bear Case

Cheap is a claim about a denominator, and Cal-Maine's denominator has just moved. Every lens that makes this stock look inexpensive is fed by a trailing year that contains most of the highest egg prices the industry has ever printed. The company itself has now told everyone that the period is over. Operating cash flow more than halved in fiscal 2026, driven by lower net average egg selling prices, and the fourth quarter was loss-making, which under the variable dividend policy means holders get paid nothing until cumulative profitability is restored. That is not a forecast. It is a filed disclosure about a year that has already happened.

The supply picture behind it is the part a holder should sit with. The filing points to industry flock data "materially above USDA's published estimate and indicative of abundant egg supplies". Abundant supply in a commodity with near-zero product differentiation on the conventional side does one thing to price, and it does it without regard to how well any single producer is run. Cal-Maine does not set the price it receives on 45% of its revenue. It receives whatever the quoted market pays that week.

Compare margins across the protein complex and the shape of the problem is obvious. The trailing operating margin here is 27.7%. PPC, running a vertically integrated chicken business at scale, reports an operating margin of 7.4%. SFD reports 8.4%, HRL 5.8%, and TSN 2.1%. Nothing about egg production is structurally four times more profitable than chicken or pork processing. That gap is a price spike wearing the costume of a moat, and the direction of travel from 27.7% is not sideways.

The acquisition that is supposed to smooth this out is currently doing the opposite. The filing is candid: "Echo Lake Foods has and is expected to continue to experience a temporary reduction in production volumes and higher costs, which began late in the second quarter of fiscal 2026 and are expected to be completed in fiscal 2027". Layer on the company's own admission that "Our experience managing prepared foods businesses is much more limited than our experience managing our shell egg" operations, and the diversification leg arrives with execution risk attached, in the year the core business needs it most.

The legal tail is real and it is long. High egg prices drew exactly the attention high prices always draw, and the company lists "investigations or lawsuits by state or federal government agencies or private plaintiffs" among the reactions to them. Beyond the antitrust matters, there is an adverse judgment already on the books: "the court entered findings of fact and conclusions of law in favor of the State of Oklahoma" in a nuisance and trespass case where defendants were found jointly and severally liable. Litigation of this kind does not usually break a balance sheet with no debt on it, but it does consume management attention and cash in years when both are scarcer than they were.

Here is the honest frame for what the price is doing. This is not a stock where the market is demanding heroic growth and might be disappointed. The market is already pricing a decline, one steeper than 5% a year in operating profit, sustained. The bear case is not that the price is too optimistic. It is that the price may be right, that mid-cycle egg economics really do look like the rest of the protein complex, and that a buyer paying today is not getting a discount so much as an accurate quote on a business whose best year is in the rear-view.

Valuation

Take the price as given and ask what has to happen for it to make sense. The answer is unusual, because nothing has to go right. At $90.31 the quote already assumes the business shrinks. Run it the other way and a company giving up 5% of its operating profit every single year would still warrant more than this. That is a bound rather than a solved figure, and it points one direction: the market is not paying for expansion here, it is discounting contraction.

That reads through to every method. Asset value, earnings power, peer multiples and forward cash flows all land above the current price, with peer multiples furthest above and the forward-growth methods closest to it. When no family finds the price expensive, the disagreement among methods stops being the interesting question. The interesting question becomes what the methods are being fed.

They are being fed a trailing year that produced roughly $1.04 billion of operating income at a 27.7% operating margin. Whether that number describes the business or describes a moment in the egg market is the entire investment question, and the price has already voted. Work the arithmetic backwards and today's quote is consistent with the operating margin settling near 7.8% inside about four years. That figure is worth pausing on, because it is not a stress case. It is roughly where the rest of the protein complex actually operates: PPC discloses a 7.4% operating margin and SFD 8.4%. In other words, the price does not require Cal-Maine to keep boom economics. It requires Cal-Maine to end up looking like a normal meat and poultry processor, which is close to what its own fiscal 2026 results already show it converging toward.

The fiscal 2026 filing supplies the inputs for that convergence directly. Specialty shell egg prices fell 9.5%, taking $112.6 million out of net sales, offset by a 2.4% volume gain worth $28.1 million. Prepared foods contributed "$244.8 million or 8.4% of our net sales", a line that did not meaningfully exist a year earlier. The mix is shifting toward contracted product while the commodity line deflates, which is the same story the margin math is telling from the other end.

The downside boundary is unusually clean. The company reports that "No amounts were outstanding under the Credit Facility during fiscal 2026 or fiscal 2025", so there is no funded debt ahead of the equity and no refinancing to negotiate in a weak year. Cash on hand fell during fiscal 2026, which is what a down cycle plus an acquisition plus buybacks looks like, and the share count has still come down about 0.8% a year across the last four years. A cyclical with no borrowings does not face the forced-seller problem that usually converts a bad year into a permanent impairment.

What the buyer is left with is a wager on where egg economics settle rather than on how fast anything grows. The methods all sit above the price because they read a peak year as a normal one; the price sits where it does because the market does not. Which of those is closer to the truth will be visible in the printed margin two or three prints from now, not in any model.

Catalysts

The regulatory overhang that came with the price spike has now been settled. The fiscal 2026 annual report discloses that "various states' attorneys general sought to join the DOJ's investigation or requested access to the confidential disclosures by the Company to the DOJ" and that "On or about June 25, 2026, the Company entered into an agreement with the DOJ and 17 states' attorneys general to resolve" the matter. Removing a federal antitrust investigation from the picture takes one binary off the table, though the private and state-level litigation described elsewhere in the filing continues.

The annual report itself, filed July 22, 2026, is the more consequential event for the operating story. It carries the full-year cash-flow decline, and it carries the dividend decision that follows from it: because the payout formula is a fixed share of each quarter's profit, a loss-making fourth quarter means the company "will not pay a dividend for a subsequent profitable quarter until the Company is profitable on a cumulative basis". For a shareholder base that has been paid variably and generously through the boom, the restart of that payout is now the clearest single signal of when the cycle has turned, and it is a signal the company cannot fudge.

The second thing to watch through fiscal 2027 is the prepared foods build-out. Echo Lake's "temporary reduction in production volumes and higher costs" is disclosed as running into fiscal 2027, so the segment that is meant to dampen earnings swings will be carrying elevated costs during the stretch when the shell egg business is weakest. If prepared foods revenue holds its share while those costs roll off, the diversification thesis gets its first real proof point. If it does not, the company enters the next up-cycle looking much the way it entered the last one.

Peer Cohorts (Per Segment, With Filing Citations)

Shell eggs (single segment) (reported)

• PPC (PILGRIM’S PRIDE CORPORATION)
• FY2025 10-K: …independent farmers throughout the U.K. Live pigs sourced from independent farmers make up approximately 69.4% of the total number of pigs processed by the Company each year. Although we generally expect adequate supply of live pigs in the U.K., there may be periods of imbalance in supply and demand. Trademarks We…
• FY2025 10-K: …Rico. For segment reporting purposes, the Puerto Rico operations are included in the U.S. reportable segment. The chicken products processed by the U.S. reportable segment are sold to foodservice, retail and frozen entrée customers. The segment's primary distribution is through retailers, foodservice distributors and…
• TSN (TYSON FOODS, INC.)
• FY2025 10-K: …facility that shares a facility with and is included in the Prepared Foods segment in the table above. Prepared Foods Our Prepared Foods segment includes processing facilities and a vertically-integrated turkey operation. Our Prepared Foods facilities process fresh and frozen chicken, turkey, beef, pork and other raw…
• FY2025 10-K: …produced. Fertile eggs are incubated at the grandparent hatchery and produce pullets (i.e., parents). Pullets are raised to 20 weeks of age, sent to breeder houses, and the resulting eggs are sent to our hatcheries. Once chicks have hatched, they are sent to broiler farms. There, contract farmers care for and raise…
• SFD (SMITHFIELD FOODS, INC.)
• FY2025 10-K: …us-gaap:ProductAndServiceOtherMember us-gaap:AllOtherSegmentsMember 2024-01-01 2024-12-29 0000091388 us-gaap:IntersegmentEliminationMember us-gaap:AllOtherSegmentsMember 2024-01-01 2024-12-29 0000091388 us-gaap:OperatingSegmentsMember smf:RetailServicesMember 2024-01-01 2024-12-29 0000091388…
• FY2025 10-K: …2024-12-30 2025-12-28 0000091388 smf:CornCommodityForwardContractsMember us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember 2024-12-30 2025-12-28 0000091388 smf:SoybeanMealCommodityForwardContractsMember us-gaap:NotDesignatedAsHedgingInstrumentEconomicHedgeMember 2024-12-30 2025-12-28 0000091388…
• HRL (HORMEL FOODS CORPORATION)
• FY2025 10-K: …is included in segment profit; however, earnings attributable to the Company's corporate venturing investments and noncontrolling interests are excluded. These items are included below as Net Unallocated Expense and Noncontrolling Interest when reconciling to Earnings Before Income Taxes. The Company is an integrated…
• FY2025 10-K: U.S. and other countries. Some of the more significant owned or licensed trademarks used by the Company or its affiliates are: HORMEL, ALWAYS TENDER, APPLEGATE, AUSTIN BLUES, BACON 1, BLACK LABEL, BREAD READY, BURKE, CAFÉ H, CERATTI, CHI-CHI'S, COLUMBUS, COMPLEATS, CORN NUTS, CURE 81, DAN'S PRIZE, DI LUSSO, DINTY…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Cal-Maine Foods FY2026 Form 10-K, filed July 22, 2026