Why Cal-Maine Foods Shares Were Volatile Today

Cal-Maine Foods (NASDAQ: CALM), the nation's largest egg producer, missed on earnings but announced an agreement to acquire breakfast food manufacturer Echo Lake Foods. Investors weren't sure what to make of it all. In a volatile day for broader markets, shares of Cal-Maine fell 8% at the open, soared as high as up 6% mid-day, and were up about 3% heading into the close.

A busy quarter

Egg prices have been in the news due to the impact of bird flu, but Cal-Maine is trying its best to remain focused on business as usual. The company earned $10.38 per share in its fiscal third quarter ending March 1, up from $3 per share a year prior but below the $10.90 per share Wall Street had expected.

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Similarly, Cal-Maine's $1.42 billion in quarterly sales was up 102% year over year but $10 million short of expectations. CEO Sherman Miller spoke of persistent "dynamic market conditions" but said "the entire Cal-Maine Foods team did an outstanding job in maximizing production through a period of high demand, while operating safely and maintaining diligence on biosecurity measures."

Cal-Maine also announced plans to buy Echo Lake, a maker of ready-to-eat breakfast foods, for $258 million. The target generated sales of $240 million in 2024.

Is Cal-Maine a buy?

Cal-Maine shares are up 48% over the past year but down 20% from their highs. This is not a stock that usually enjoys the spotlight, but the company has operated well through a period of volatility and unexpected attention.

Investors buying in today are unlikely to see many years like the last one. But the company offers an attractive 4.6% dividend yield and just announced a new $500 million share repurchase agreement. Cal-Maine could be an attractive option for those looking for a mix of modest growth and income.

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Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cal-Maine Foods. The Motley Fool has a disclosure policy.