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Cal-Maine Foods, Inc.: stock price estimation in the midst of pandemic

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  • Trejo-Pech, Carlos Omar
  • White, Susan

Abstract

This case concerns an analyst’s task to value Cal-Maine Foods, Inc., the largest and only publicly traded U.S. egg production firm. The case takes place in 2020, at the time of the Covid-19 pandemic. Historically volatile egg prices were even more volatile in April 2020, with a large spike in prices that led the state of Texas to sue the firm for price gouging. Added to this, Cal-Maine had an unexpectedly bad earnings report a few months earlier, and prior to that, the firm cut its dividend. How should the analyst incorporate these shocks – or should they be included at all? How can the analyst assess the risk of a company that has volatile revenues and costs and a widely varying beta? Which factors is the analysis most sensitive to? Was the market overvaluing Cal-Maine? Or, was there potential for investors to profit from investing in the firm?

Suggested Citation

  • Trejo-Pech, Carlos Omar & White, Susan, 2021. "Cal-Maine Foods, Inc.: stock price estimation in the midst of pandemic," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(5), April.
    • Handle: RePEc:ags:ifaamr:316322
    DOI: 10.22004/ag.econ.316322
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    Keywords

    Agribusiness; Financial Economics;

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