Cal-Maine currently trades at $94.19 per share and has shown little upside over the past six months, posting a small loss of 4%.

Given the underwhelming price action, is now a good time to buy CALM? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free.

Why Does Cal-Maine Spark Debate?

Known for brands such as Egg-Land’s Best and Land O’ Lakes, Cal-Maine (NASDAQ:CALM) produces, packages, and distributes eggs.

Two Things to Like:

1. Skyrocketing Revenue Shows Strong Momentum

A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, Cal-Maine grew its sales at an incredible 35.3% compounded annual growth rate. Its growth surpassed the average consumer staples company and shows its offerings resonate with customers.

2. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Cal-Maine has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the consumer staples sector, averaging 17.9% over the last two years.

One Reason to be Careful:

Revenue Projections Show Stormy Skies Ahead

Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.

Over the next 12 months, sell-side analysts expect Cal-Maine’s revenue to drop by 25.8%, a decrease from its 35.3% annualized growth for the past three years. This projection is underwhelming and implies its products will see some demand headwinds. At least the company is tracking well in other measures of financial health.

Final Judgment

Cal-Maine’s merits more than compensate for its flaws, but at $94.19 per share (or 9× forward P/E), is now the right time to buy the stock? See for yourself in our full research report, it’s free.

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