The food producer is producing record profits, and its shares are poised for gains as the company expands beyond eggs. By Todd Chanko

While investors walk on eggshells anticipating Fed decisions, tariff relief, and evanescent cease-fires, one company is steadily feeding investors nutritious dividends, cash flows, and earnings per share growth.

Cal-Maine Foods is the nation's largest producer of eggs. The Ridgeland, Miss.--based company boasts a free cash flow yield of 31% and grew earnings per share, or EPS, by 35% year over year to $4.12 in the first quarter of its fiscal 2026. It posted record performance across all metrics during the quarter: Net sales were up 17.4% year over year and operating cash flow more than doubled during the same period, from $118 million to $279 million.

Remarkably, Cal-Maine achieved these results during a time of volatile egg prices, continued vulnerability of flocks to the highly pathogenic avian influenza, and a weary consumer. The stock also pays a 6.6% dividend yield at current prices.

"We're focused on growing specialty eggs and value-added prepared foods -- areas that offer more stable margins, deeper customer partnerships, and stronger alignment with consumer behavior," Sherman Miller, president & CEO of Cal-Maine Foods, tells Barron's.

What distinguishes the company is its vertical integration. Founded in 1957, Cal-Maine oversees hatching, flock maintenance, egg production, marketing, and distribution. However, it doesn't sell directly to consumers. Rather, it distributes to national and regional grocery chains, club stores, and food-service companies such as Sysco, which in turn sell to restaurants, healthcare and education facilities, and hotels. Cal-Maine's eggs are sold through household names such as Walmart, Costco, and Publix. Almost half of its revenue -- 49% -- in fiscal 2025 was derived from its top three customers.

The company has already embarked on a strategy to diversify its revenue stream, including through acquisitions. Earlier this year, Cal-Maine acquired Echo Lake Foods, which makes prepared egg-based breakfast-style entrees, for $258 million in an all-cash deal. Echo Lake already contributed 84% of Cal-Maine's Prepared Foods segment's $84 million in revenue last quarter.

"Echo Lake is an attractive adjacent business that adds some stability to Cal-Maine's earnings stream by expanding its value-added product mix, " says Don Cleven, co-head of small-cap strategy at Charlotte, N.C.--based Wedge Capital, which holds 259,000 shares of Cal-Maine as of Sept. 30, according to regulatory filings.

While comprising only 7.6% of this quarter's total $923 million in sales, Cal-Maine is confident that the acquisition of Echo Lake will be margin accretive, while expecting the unit to deliver "at least mid-single digit accretion to earnings starting in" fiscal 2026. In 2024, before being acquired, Echo Lake produced $242 million in sales and $47 million in earnings before interest, taxes, depreciation and amortization, or Ebitda. That makes for an attractive Ebitda margin of 19%.

Even before adding Echo Lake to its portfolio of 25 other acquisitions, Cal-Maine was starting to seize on the public's increasing appetite for "specialty eggs." Including cage-free, organic, brown, free-range, pasture-raised, and nutritionally-enhanced eggs, the category accounted for 36% of Cal-Maine's fiscal 2026 first quarter's $790 million in egg sales, an increase of 10% over last year. "Specialty and premium segments are showing higher repeat usage, higher per capita consumption, and alignment with wellness, taste, and clean-label preferences," says CEO Miller.

After years of being mistakenly linked to high serum cholesterol, eggs were rolled out to the public as a "healthy" food by the FDA in December 2024. Demand is strong, and U.S. consumption is expected to grow about 6% in 2026 to 271 eggs per capita, according to U.S. Department of Agriculture forecasts. Cal-Maine, for its part, is "seeing rising demand for complete, high-quality proteins -- including from consumers on GLP-1 medications who are gravitating toward protein-dense, satiating foods," says Miller. "Millennials, Gen Z, and young families are especially strong adopters, making eggs a mainstream wellness staple."

Avian flu, which still threatens not only the U.S. but also flocks worldwide, would seem to be the biggest damper to investors' appetites for Cal-Maine. Cal-Maine, though, "has poured resources into advanced biosecurity, supported by a scale and balance sheet that are difficult for smaller producers to match," says Cleven. "Those measures were valuable in the last bird-flu outbreak, when Cal-Maine largely avoided the severe flock losses that crippled many competitors."

In fact, at the peak of the outbreak earlier this year, Cal-Maine generated record sales of $1.4 billion for the quarter ended March 31, jumping 102% year over year, despite seeing outbreaks at its facilities in Kansas and Texas in the final months of 2024. Nevertheless, despite Cal-Maine's enviable biosecurity efforts, there is always the risk of newer, virulent strains of HPAI that could severely hamper its egg production.

Meanwhile, Cal-Maine and other egg producers are the targets of lawsuits filed in federal court in Indiana, alleging price-fixing in response to HPAI -- an unanticipated disease-related risk. The company declined to comment on the litigation.

Keeping chickens well fed and happy poses another risk for Cal-Maine: Their corn and soymeal diet is subject to swings in commodity prices. Moreover, should consumer nutrition trends shift away from eggs' newfound acceptance, the company's predominant revenue driver could depress margins. Lastly, although the cage-free specialty egg category is supported by cage-free legislation in 10 states, with additional mandates on the horizon, should such legislation be overturned or otherwise not be implemented, Cal-Maine's $848 million capital expenditures on cage-free initiatives may not reap their anticipated returns.

Cal-Maine boasts an unlevered balance sheet and so far this year has repurchased $50 million of shares under its $500 million authorization, yielding about a 1.1% return for shareholders. With 49 production facilities in 18 states capable of processing over eight million eggs per hour, the company is poised to build on its 10-year 9.5% compound annual growth rate in net sales. Provided consumers continue to appreciate the protein-rich and economic benefits of its eggs, and that Cal-Maine can continue to mitigate the unfortunately resistant avian-flu scourge, revenue could top $5 billion in 2026. A discounted cash flow methodology values the company at $101, about 18% higher from current levels.

Investors should be scrambling for shares.

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