Egg prices in the United States have surged by 50% over the past 12 months, creating a windfall for two major egg producers—Vital Farms and Cal-Maine Foods.
While rising food costs have squeezed consumers, investors in these companies have seen remarkable returns, with both stocks outperforming even the biggest names in tech.
Shares of Vital Farms have skyrocketed by 154% in the past year, while Cal-Maine Foods has gained 90%, far exceeding the 20.9% rise of the S&P 500 and even surpassing the 52.4% gain of the Roundhill Magnificent Seven ETF, which tracks the top-performing tech stocks.
The spike in egg prices, caused by bird flu outbreaks and increased consumer demand, has fueled these gains.
According to the Bureau of Labor Statistics, the average price of a dozen eggs hit $5.29 in January, up more than 50% from the previous year.
Vital Farms (VITL stock) emerges as the big winner
Vital Farms, known for its free-range egg production, has been a standout performer.
The company’s revenues soared 31% year-over-year to $145 million in the most recent quarter, in line with analyst expectations.
The strong performance has led to a nearly tenfold increase in profits for 2023, and analysts forecast a further 90% jump in 2024.
Russell Diez-Canseco, President and CEO of Vital Farms, emphasized the company’s rapid expansion.
“Our sales momentum from the first half of the year carried into the third quarter of 2024, and we posted another strong topline result with net revenue of $145 million, a 31.3% growth versus the same period last year,” he said.
The company is aggressively expanding, adding new farms, and preparing to open a state-of-the-art egg-washing and packing facility in Indiana.
With these developments, Vital Farms remains on track to reach its ambitious goal of $1 billion in net revenue by 2027, Diez-Canseco said.
Vital Farms share price chart by TradingView
As of February 1, 4 analysts had a ‘strong buy’ recommendation for the stock, 8 had a ‘buy’ recommendation, 2 recommended ‘hold’ and none had a ‘sell’ recommendation, according to Fintel.
The average one-year price target for Vital Farms is $48.81, an upside of over 29%, Fintel said.
Telsey Advisory Group recently initiated coverage with an “Outperform” rating, citing the company’s strong fundamentals and potential for further growth.
“Vital Farms presents a compelling and robust growth opportunity for investors through its participation in the fast-growing specialty egg category,” Stifel analyst Matthew Smith said in May last year.
However, with a price-to-earnings ratio of 33, the stock could be slightly overvalued compared to the food products industry average of 31.5.
Cal-Maine Foods (CALM stock) rides the wave of high egg prices
While Vital Farms has dominated headlines, Cal-Maine Foods has also seen significant gains.
The Mississippi-based company, one of the largest egg producers in the US, reported fiscal second-quarter earnings of $4.47 per share, with revenue jumping 82.5% year-over-year to $954.7 million.
Both figures exceeded analyst expectations.
The company attributed its strong performance to rising egg prices, seasonal holiday demand, and its latest acquisition of ISE America’s production assets.
CEO Sherman Miller highlighted the impact of supply disruptions due to bird flu outbreaks.
“Egg prices have continued to rise this fiscal year as supply levels of shell eggs have been restricted due to recent outbreaks of highly pathogenic avian influenza,” he said.
Cal-Maine share price chart by TradingView
The company sold nearly 330 million dozen eggs in the quarter, a 14.5% increase from the previous year, while the average price per dozen surged 58.4% to $2.74.
Analysts predict continued strong performance for Cal-Maine, with revenue expected to grow by 20% annually through the end of 2025, far outpacing the broader industry’s projected growth rate of 2.4%.
The average one-year price target for Cal-Maine Foods is $104.55, according to Fintel, which represents a downside of 2% from its current share price. The forecasts range from a low of $97.97 to a high of $113.40.
2 analysts recommend a ‘strong buy’ for the stock, 4 recommend a ‘buy’, 2 call for ‘hold’ and none recommend a ‘sell’.
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