By Evie Liu

Cal-Maine Foods is expected to post a significant sales and earnings drop for its latest quarter, thanks to falling egg prices.

The nation's largest egg producer is set to report fiscal-second-quarter financial results before the market opens Wednesday.

For producers like Cal-Maine Foods, revenue is largely driven by egg prices, since much of their operational costs -- such as feed, labor, and housing -- are relatively fixed in the short term. When egg prices spike, revenue jumps immediately, and profits usually rise faster than sales.

During the avian influenza outbreak last year, Cal-Maine's biosecurity investment helped it avoid the severe flock losses that crippled many competitors. Sales in fiscal 2025, which ended in May, were 83% higher than a year ago, while net income more than quadrupled.

But egg prices have come back down to normal levels after an unusually strong period in 2025. Prices for a dozen large grade-A eggs have fallen to a national average of $2.86 as of November from $6.23 in March, according to data from the U.S. Bureau of Labor Statistics.

That means falling dollar sales for Cal-Maine and shrinking margins. For the three months ended in November, analysts polled by FactSet expect Cal-Maine sales to decline 16% from a year ago to $797 million, and earnings to shrink by more than half to $1.95 per share.

The weaker outlook has pushed Cal-Maine shares down by more than 30% in the past four months. Still, some on Wall Street believe the stock is oversold. Analysts polled by FactSet have an average target price of $98, nearly 12% above the stock's current price around $79.

Part of the optimism has come from Cal-Maine's shifting focus toward higher-margin segments like specialty eggs and prepared foods. These products have higher added value, enjoy stickier consumer demand, and are less vulnerable to the boom-and-bust pricing cycles of conventional commodity eggs.

Specialty eggs, which include cage-free, organic, and pasture-raised eggs, have seen growing popularity as more consumers are willing to pay a premium for ethical production or better nutrients. In the previously reported quarter, Cal-Maine's specialty-egg sales have grown 10% from a year ago, outpacing conventional eggs' 4% growth.

Earlier this year, Cal-Maine acquired Echo Lake Foods, which makes ready-to-eat breakfast foods, such as omelets, scrambled eggs, and pancakes. Cal-Maine has already announced millions of dollars of new capital investments in the firm, aiming to increase its prepared foods production by 30% in the next two years.

Benchmark analyst Ben Klieve said in a note this week that Cal-Maine and peers would benefit from "an extended period of normalized [egg] pricing."

That would allow Wall Street to analyze how durable earnings growth would be as the industry moves away from commodity eggs to specialty products -- a positive shift that the stock price doesn't currently reflect.

Cal-Maine is a Barron's stock pick from December. '

Write to Evie Liu at evie.liu@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 06, 2026 16:26 ET (21:26 GMT)

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