CALM's Strategic Cage-Free Expansion Sets It for Solid Market Gains
Cal-Maine Foods CALM is moving ahead with its $60 million expansion plan, aimed at expanding capacity for 1.1 million cage-free layer hens and 250,000 pullets by end of 2025. This is part of CALM's multi-year strategy to capitalize on shifting consumer preference for cage-free eggs. With ten U.S. states enforcing cage-free egg production by 2030, around 73% of U.S non-organic laying hens will need to be transitioned to cage-free systems to meet demand.
To address this evolving market, Cal-Maine has been strategically scaling its cage-free operations through a combination of organic investments and acquisitions. The company has been upgrading existing facilities and converting conventional housing to cage-free environments.
Cal-Maine's inorganic growth efforts are equally significant. In 2022, it acquired the remaining 50% interest in Red River Valley Egg Farm, adding around 1.7 mm cage free layers. The acquisition of Fassio Egg Farms, Inc in September 2023 increased capacity by 1.2 million laying hens, primarily cage-free. The acquisition of ISE America, Inc. in late 2024 added an additional 1 million cage-free laying hens.
Backed by its efforts, cage-free eggs now account for a larger share of CALM's product mix and represented approximately 29.5% of its total net shell egg sales in fiscal year 2024.
While cage-free egg production is more expensive than for conventional eggs, it supports premium pricing, offering a long-term growth driver for Cal-Maine.
Post Holdings Steps Up Cage-Free Investment
Post Holdings, Inc. POST is also incurring additional operating and capital costs to procure cage-free eggs, modify existing layer hen facilities and construct new cage-free layer hen housing and comply with other farm animal initiatives.
Post Holdings' investment plan for 2025 includes the completion of the Norwalk, IA, precooked egg facility expansion and continued cage-free egg facility expansion, for aggregate expenditures of $80-$90 million.
Vital Farms' Pasteur-Raised Offerings Have an Edge
The specialty egg (including pasture raised and free-range) market has witnessed a CAGR of 21.4% between 2020 and 2024 to reach $8.3 billion in retail sales in 2024.
Vital Farms, Inc. VITL, the leading U.S. pasture-raised egg brand, is riding strong consumer demand, with customers willing to pay more for ethically sourced, transparent and sustainable food.
Vital Farms continues to accelerate supply expansion. During the first quarter of 2025, Vital Farms added new family farms to its network, which now exceeds 450 family farmers. Vital Farms' internal capacity expansion plans also remain on track, with the construction of an additional egg washing and packing line at its Egg Central Station facility in Missouri slated for completion during the fourth quarter of 2025, as originally scheduled.
CALM's Price Performance, Valuation & Estimates
Cal-Maine gained 68.1% in a year against the industry 's 9.2% decline.
CALM is currently trading at a forward 12-month price/earnings (P/E) ratio of 17.84X compared with the industry's 11.32X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Cal-Maine's fiscal 2025 earnings is $22.73 per share, indicating a year-over-year increase of 299.5%. The estimate for fiscal 2026 of $5.71 indicates a 74.9% decline. The chart below depicts the revision activity for CALM's earnings estimates for 2025 and 2026.
CALM currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Cal-Maine Foods, Inc. (CALM): Free Stock Analysis Report
Post Holdings, Inc. (POST): Free Stock Analysis Report
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