CALM

We rate CAL-MAINE FOODS INC (CALM) as a Reduce with a composite score of 46.5/100 at a current price of $84.86. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in quality (60th percentile) and stability (53th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (20th percentile) and investment (38th percentile) tempers our overall conviction. We assign a Narrow Moat rating (49/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

CAL-MAINE FOODS INC holds a lower-quartile position (#13 of 17) within the Agriculture, Forestry, And Fishing sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 46.5/100 places it at rank #2557 in our full 7,333-stock universe. At $4.0B in market capitalization, CAL-MAINE FOODS INC is a mid-cap player in the Agriculture, Forestry, And Fishing space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue contraction of -2% combined with momentum at the 20th percentile paints a cautious picture of the near-term business outlook. The market appears to be pricing in continued challenges, and a catalyst for reversal is not clearly visible from current data.

The margin cascade tells an important story: gross margins of 37% (+18.9pp vs sector) narrow to operating margins of 29% (+27.1pp vs sector) and net margins of 23.4%, yielding a gross-to-net conversion rate of 63%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $84.86, CAL-MAINE FOODS INC is trading near fair value based on current fundamentals. Our value factor score of 49/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 3.9x (a 65% discount to the sector median of 11.1x), EV/EBITDA of 3.1x (discounted to peers), P/B of 1.5x, P/S of 1.0x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to CAL-MAINE FOODS INC. The company exhibits strong financial stability with a beta of 0.30, conservative leverage (17% D/E), and a stability factor in the 53th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: low beta of 0.30 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 53th percentile and quality factor at the 60th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (17% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate CAL-MAINE FOODS INC's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 38.1%, disciplined leverage (17% D/E), best-in-class net margins of 23.4%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — CAL-MAINE FOODS INC meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 32.7% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, CAL-MAINE FOODS INC receives a Reduce rating with a composite score of 46.5/100 (rank #2557 of 7,333). Our quantitative framework assigns a Narrow Moat (49/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 44/100.

Our analysis does not support a constructive view on CAL-MAINE FOODS INC at this time. The combination of the current quantitative profile, low uncertainty, and exemplary capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.