$48.07
$102.64
bear $48.07
base $54.07
bull $102.64
margin of safety $36.00
market price* $63.65
Cal-Maine Foods is the largest shell-egg producer in the United States. At the end of fiscal 2026 (year ended May 30, 2026) it had about 50.0 million laying hens plus 14.5 million pullets and breeders, sold roughly 1.2 billion dozen eggs, and shipped to customers in 47 states and Puerto Rico, in conventional, cage-free and other specialty eggs. Walmart (including Sam's Club) was 30.0% of net sales, down from 34.0% two years earlier. The profits of this business follow the egg price, which the company does not control. Net sales were $2,326M in fiscal 2024, $4,262M in fiscal 2025 (avian flu removed a large part of the national flock and egg prices hit records) and $2,912M in fiscal 2026. Net income attributable to shareholders was $278M, $1,220M and $317M. In fiscal 2026 the average conventional egg price fell 50.9% and the specialty price fell 9.5% as the national flock rebuilt (the USDA counted 312.0M hens on July 1, 2026 against a five-year average of 308.0M). Net income for the fourth quarter (March to May 2026) was a loss of roughly $36M, so the business exited the year losing money, and the company will not pay its variable dividend again until those losses are recovered. How we measured earnings. We use owner earnings: cash from operations, less the cash swings in receivables, inventory, payables and taxes, less stock compensation, less all capital spending. Because Cal-Maine's revenue moves with egg prices rather than with added capacity, we did not split off any spending as growth; all capital spending is treated as the cost of staying in business. That is conservative: spending averaged about $104M a year over ten years against depreciation of about $71M, and we give no credit for the capacity it bought. Owner earnings per share by fiscal year, 2017 to 2026: -$1.55, $2.59, $0.91, -$0.70, -$0.14, $2.57, $14.65, $4.06, $23.77 and $7.41. We also strip out the interest earned on the company's cash and investments ($46M before tax in fiscal 2026), because that cash is counted separately below. The normal level. The ten-year window covers a full cycle: a glut and losses in fiscal 2017, a weak stretch through fiscal 2021, two avian-flu spikes (fiscal 2023 and 2025) and the fall-back in fiscal 2026. Using the median, not the average, keeps the spike years from setting the level. The median is about $123M a year, or $2.62 per share on today's 47.1M diluted shares (46.98M outstanding at year end plus about 0.16M of dilution). The recent quarters were not used to reset that level. Growth-path check: owner earnings per share fell 69% in fiscal 2026 ($23.77 to $7.41); the base case assumes a further fall in the next two years and no rebound, so it does not lean on a reversal of the recent slide. Base case, $54.07 per share. Fiscal 2027 and 2028 look like the lean years of fiscal 2017 to 2021 (about $7M a year), because the latest quarter was a loss, prices have dropped by half and the flock has been rebuilt. After that, earnings return to the $123M median and stay flat indefinitely; no growth is credited. The business is worth about $1,845M ($39.13 per share). Cal-Maine has no borrowings (its $250M credit facility is undrawn and expires in November 2026, so it will need renewing) and holds $107M of cash plus $817M of investments. We keep $150M for operations, subtract the $25M paid on July 10, 2026 for the Eggland's Best franchise territory, a $19.6M accrual for the Kraft egg-products antitrust judgment, and about $25M for outside owners of a partly owned subsidiary. That leaves net cash of about $704M ($14.94 per share), for total value of about $2,549M, or $54.07 per share. Bear case, $48.07 per share. The five years from fiscal 2017 to 2021 averaged only about $7M a year (three of the five were losses), and that is what the bear case repeats before earnings return to $123M in year six. Oversupply is a live risk: the flock is above its five-year average and prices fell by half in a year. The bear case also pays the full Kraft judgment: $43.6M after trebling, for which Cal-Maine is jointly and severally liable, with a $23.9M bond posted to appeal (the company has accrued $19.6M). The business is worth about $1,569M ($33.28 per share). Net cash after claims is about $698M ($14.80 per share). Total: about $2,266M, or $48.07 per share. The cash pile is why the bear case is not much lower than the base case. Bull case, $102.64 per share. Earnings equal the ten-year average of about $248M a year ($5.26 per share), which includes the spike years, and hold there. What supports it: avian flu keeps removing hens (40.2M layers in 2024, 45.2M in 2025 and 19.2M through July 20, 2026), and Cal-Maine, as the largest producer, has earned spike-level profits twice in the last four years. The business is worth about $4,134M ($87.70 per share), net cash after claims is about $704M ($14.94), and the total is about $4,838M, or $102.64 per share. What we did not credit. No value is given for growth from the ISE America assets bought in June 2024 ($275M), the Eggland's Best territory, or cage-free expansion, because their profits are not yet separable from the egg-price cycle. A cage-free law in ten states and Walmart's 30% share of sales are risks, not values, and are not modeled beyond the bear case. The Department of Justice and 17 state attorneys general investigation into egg pricing was resolved on or about June 25, 2026 with no fines or penalties assessed, a $1.5M payment to the states, a donation of 30 million eggs and compliance measures; a similar investigation by the State of Washington is still open and management cannot estimate any loss, so no amount is included in any case. What changed since our last estimate. We previously estimated $58.70 (bear), $94.50 (base) and $147.90 (bull). That analysis started from about $270M of yearly earnings, roughly the average of two recent high-price years, and assumed steady growth. We now anchor on the ten-year median, which includes the weak years, and we have given weight to the fourth-quarter loss. Offsetting factors that help: the DOJ resolution with no fines, about $132M of share repurchases in fiscal 2026 (shares outstanding fell from 48.5M to 47.0M), and a cash and investment balance of $924M. What would make this wrong. If egg prices settle at a structurally higher level (for example through disease-driven supply losses that keep recurring or cage-free requirements that raise every producer's cost), the median understates today's earning power and the shares are worth more. If oversupply lasts longer than five years, or Walmart cut its purchases, the value would be lower, although about $15 per share of net cash would remain. Margin-of-safety price. The margin-of-safety price is $36 per share, about a third below the base case and about a quarter below the bear case, given how unpredictable egg prices are. That is roughly $21 per share for the egg business after counting net cash, or about 12% of median earnings.