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Key Takeaways
- Shares of Cal-Maine Foods fell 5% in premarket trading Wednesday, a day after the country's largest egg producer said it had received a request for information from the U.S. Department of Justice.
- Antitrust regulators are investigating if egg companies increased prices more than necessary in response to a bird-flu outbreak.
- Cal-Maine's fiscal third-quarter profit more than tripled year-over-year, while sales more than doubled.
Cal-Maine Foods’ (CALM), shares fell 5% Wednesday morning in premarket trade as a U.S. Department of Justice inquiry on egg prices trumped the company’s booming fiscal third-quarter earnings and sales.
Cal-Maine reported Tuesday that it had received a civil investigative demand last month from DOJ’s antitrust department, which is investigating allegations of egg price gouging. A bird flu outbreak led to a sharp decrease in egg supply. This has caused prices to rise in recent quarters. Cal-Maine is the largest egg-producing company in the United States. It has stated that it will cooperate with the DOJ’s investigation.
Cal-Maine's Sales Double, Profits Triple Year-Over-Year
Cal-Maine’s third quarter fiscal earnings were $10.38 a share, on revenues of $1.42 billion. This was more than double the $703.1 million and triple the $3 a share it generated last year. The company's average selling price of a dozen eggs was $4.06 in the quarter, nearly double the $2.25 mark from a year ago. It stated that as of 1 March, the U.S. Department of Agriculture estimated that the country’s total egg-laying population was 285,000,000, the lowest since September 2015.
The company also announced that it had agreed to purchase Echo Lake Foods which produces ready-to-eat eggs and breakfast foods for approximately $258 million.
