As part of our ongoing series here at The Acquirer’s Multiple, each week we focus on one of the stocks from our Stock Screeners, and why it might be a deeply undervalued gem.
The stock this week is:
Cal-Maine Foods Inc (CALM)
Cal-Maine Foods Inc produces and sells shell eggs. Its main market is the United States. The company’s product portfolio contains nutritionally enhanced, cage-free, organic, and brown eggs. Cal-Maine Foods markets the shell eggs to a diverse group of customers, including grocery-store chains, club stores, and food service distributors. The company’s brands are Egg-Land’s, Land O’ Lakes, Farmhouse, and 4-Grain. The Company has one reportable operating segment, which is the production, grading, packaging, marketing and distribution of shell eggs.
One of the metrics we use in our screens is IV/P (Intrinsic Value to Price). Let us simplify what it means:
What is IV/P (Intrinsic Value to Price)?
IV/P tells you if a stock is a good deal based on how much value you’re getting for the price you pay.
The Calculation:
It combines a stock’s earning power, growth potential, and what it’s returning to shareholders (via dividends and buybacks) to calculate its Implied Value — what the business is worth based on its fundamentals.
The Interpretation:
- IV/P > 1: You’re getting more value than you’re paying for — a potential bargain.
- IV/P < 1: You’re paying more than the business is worth — possibly overvalued.
If IV/P is very high, it signals the stock might be trading at a deep discount.
IV/P for Cal-Maine Foods: 4.20
CALM currently has an IV/P of 4.20, meaning the stock’s implied value is calculated to be 4.2 times greater than its current price. Put another way:
For every $1 you invest, you’re potentially getting $4.20 of value.
That’s a substantial margin of safety, suggesting Cal-Maine may be significantly undervalued.
Supporting Metrics:
- Free Cash Flow Yield: 19.22%
Indicates the company is generating an enormous amount of free cash flow relative to its market cap — a strong signal of financial health and value. - Dividend Yield: 4.70%
A healthy return of capital, rewarding shareholders while signaling consistent profitability.
Why Might Cal-Maine Be Undervalued?
- Commodity Price Noise:
Egg prices can be volatile, driven by seasonal patterns, feed costs, and bird flu outbreaks. These short-term fluctuations can obscure the company’s long-term earnings power. - No Long-Term Debt:
The market may not be fully appreciating the strength of its balance sheet and financial flexibility. Cal-Maine has no long-term debt, a rarity among public companies. - Perceived Boring Business:
Egg production may not grab headlines like tech or biotech, but CALM’s stable demand and strong margins make it a classic compounder hiding in plain sight.
Conclusion:
With an IV/P of 4.20, Cal-Maine Foods (CALM) appears to be trading at a deep discount to its intrinsic value. Its powerful free cash flow, strong dividend, debt-free balance sheet, and essential industry position make it a compelling pick for value investors. While the egg business may not be flashy, CALM delivers where it counts — in cash returns and fundamental strength.
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2 Comments on “Cal-Maine Foods Inc (CALM): Is This Deeply Undervalued Stock a Hidden Gem?”
I own both Vital and Calm but they are cyclical, when eggs prices drop, so will their free cash flow. Just like potash.
Totally fair point — egg prices are cyclical, just like potash, and when they drop, so will free cash flow. But that’s also where the opportunity lies. Stocks like CALM often get priced as if high prices won’t return, creating potential bargains. With no long-term debt, strong cash flow, and a solid dividend, CALM can weather the down cycles — the key is buying below intrinsic value, not at the top of the cycle.