Cal-Maine Foods May Be Undervalued Because Its Recent Acquisition Isn't Priced In

Eric Novinson292 FollowersFollow5ShareSavePlay(11min)CommentsSummaryCal-Maine Foods is positioned as a buy despite weak results from low egg prices, with specialty eggs and prepared foods stabilizing revenue.CALM's recent $128.5M Creighton Brothers acquisition and ongoing buybacks are not fully priced in, enhancing forward value.The company’s variable dividend policy and strong balance sheet (no long-term debt, $1.15B cash) support capital flexibility and shareholder returns.CALM trades at a forward P/E of 9.5, below peers, with a one-year target price of $84.90, implying 10% upside.Getty Images Cal-Maine Foods (CALM) sells eggs, and right now, eggs are getting cheaper. That's good for consumers but might not be good for Cal-Maine. So, Cal-Maine is going to sell more specialty eggs and make more processed food. That willThis article was written byEric Novinson292 FollowersFollowI am a freelance business writer. I formerly wrote articles for the Motley Fool Blogging Network, where I won several editor's choice awards. After that, I wrote articles for the main Motley Fool site. I typically focus on restaurants, retailers, and food manufacturers, considering both growth opportunities and valuation metrics. I usually look for long term investment opportunities and plan to hold stocks for several years.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.