Value
6.2/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 9.8 |
| P/S | 9.6 |
| EV/EBITDA | 10.0 |
| Fwd P/E | 4.6 |
| Analyst target | 3.0 |
- ▸Forward P/E: 27.2x
CALM · Why this verdict
Why Cal-Maine Foods (CALM) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow represents only 47% of reported net income, signaling that a large portion of stated earnings is not translating into actual cash — a meaningful red flag on earnings quality. Quality breakdown | Over 12 months, if the conversion shortfall persists, the company's ability to fund the variable dividend and capital returns from organic cash generation will remain constrained relative to the headline profit figure. | →Stable |
| CounterIf the gap between reported earnings and cash generation narrows in subsequent quarters, the underlying profit quality would be vindicated and the conversion concern would no longer weigh on the valuation. | ||
Consensus expects approximately 75% lower earnings in the period ahead as the egg-price cycle normalizes, and the forward multiple of 22x prices in an ordinary earnings environment that has not yet materialized. Bear case | Over 12 months, quarterly EPS will track well below prior-year levels and forward estimates will continue to be revised lower, confirming the cyclical peak thesis. | →Stable |
| CounterIf avian influenza keeps egg supply constrained for longer than the market expects, earnings could remain elevated and the forward multiple could compress sharply, making the stock appear undervalued relative to the sustained profit power. | ||
The stock is trading above its near-term resistance target, leaving the reward-to-risk ratio at -0.17 — there is no geometric case for new capital at current prices. Price targets | Over 12 months, the stock will fail to sustain above resistance and will pull back toward support, delivering a negative total return from current levels. | →Stable |
| CounterA surprise positive earnings catalyst or a broader defensive rotation into consumer staples could attract new buyers above resistance, pushing the stock higher and resetting the geometry. | ||
The stock is below its 200-day moving average with the average's slope declining approximately 4.8% over the past 30 days, a confirmed downtrend that historically precedes extended underperformance. Momentum breakdown | Over 12 months, the stock will continue to make lower highs, and the 200-day moving average will remain negatively sloped unless a fundamental catalyst intervenes. | →Stable |
| CounterThe MACD is improving and the RSI at 63 suggests internal buying pressure is building; volume accumulation via rising OBV may signal that the downtrend is closer to exhaustion than continuation, and a sustained move above the 200-day MA could quickly invalidate this pillar. | ||
Free cash flow represents only 47% of reported net income, signaling that a large portion of stated earnings is not translating into actual cash — a meaningful red flag on earnings quality.
→StableQuality breakdown
- Expectation
- Over 12 months, if the conversion shortfall persists, the company's ability to fund the variable dividend and capital returns from organic cash generation will remain constrained relative to the headline profit figure.
CounterIf the gap between reported earnings and cash generation narrows in subsequent quarters, the underlying profit quality would be vindicated and the conversion concern would no longer weigh on the valuation.
Consensus expects approximately 75% lower earnings in the period ahead as the egg-price cycle normalizes, and the forward multiple of 22x prices in an ordinary earnings environment that has not yet materialized.
→StableBear case
- Expectation
- Over 12 months, quarterly EPS will track well below prior-year levels and forward estimates will continue to be revised lower, confirming the cyclical peak thesis.
CounterIf avian influenza keeps egg supply constrained for longer than the market expects, earnings could remain elevated and the forward multiple could compress sharply, making the stock appear undervalued relative to the sustained profit power.
The stock is trading above its near-term resistance target, leaving the reward-to-risk ratio at -0.17 — there is no geometric case for new capital at current prices.
→StablePrice targets
- Expectation
- Over 12 months, the stock will fail to sustain above resistance and will pull back toward support, delivering a negative total return from current levels.
CounterA surprise positive earnings catalyst or a broader defensive rotation into consumer staples could attract new buyers above resistance, pushing the stock higher and resetting the geometry.
The stock is below its 200-day moving average with the average's slope declining approximately 4.8% over the past 30 days, a confirmed downtrend that historically precedes extended underperformance.
→StableMomentum breakdown
- Expectation
- Over 12 months, the stock will continue to make lower highs, and the 200-day moving average will remain negatively sloped unless a fundamental catalyst intervenes.
CounterThe MACD is improving and the RSI at 63 suggests internal buying pressure is building; volume accumulation via rising OBV may signal that the downtrend is closer to exhaustion than continuation, and a sustained move above the 200-day MA could quickly invalidate this pillar.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Cal-Maine sits at a cyclical earnings peak with consensus expecting a roughly 75% decline in profits ahead and the stock trading above its near-term resistance target — the reward-to-risk geometry is deeply unfavorable and a confirmed technical downtrend reinforces the case for caution.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 9.1 |
| ROA | 10.0 |
| Gross margin | 2.8 |
| Op margin | 2.2 |
| Net margin | 10.0 |
| Current ratio | 5.0 |
| FCF quality | 3.8 |
| Moat | 4.8 |
| Piotroski F | 6.7 |
- ▸Excellent ROE: 27%
- ▸Strong margins: 20%
- ▸Earnings quality RED FLAG: 47% FCF/NI
- ▸No competitive moat
Growth
0.0/10data confidence 33%| Component | Sub-score |
|---|---|
| EPS growth | 0.0 |
Momentum
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 8.0 |
| Volume | 2.7 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-MA but MA slope flat
Sentiment
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.5 |
| Analyst rating | 6.3 |
| Price target | 5.3 |
- ▸Light analyst coverage (4.0) — signal dampened
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
4.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.4 |
| quality rank | 8.8 |
| growth rank | 0.0 |
- ▸Attractive P/E vs peers
- ▸Superior ROE vs peers
Technical
1.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.5 |
| 52w position | 4.2 |
Risk (lower is worse)
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.3 |
| days to cover | 2.8 |
| volatility | 4.8 |
| put call | 0.0 |
| implied vol | 4.8 |
| max pain risk | 7.0 |
| beta | 10.0 |
| news risk | 6.0 |
- ▸Elevated put/call: 2.59
- ▸Concentration risks: 1 HIGH, 2 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.8/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 6.3 |
| dividend safety | 6.5 |
| news activity | 5.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 573.0%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- MOMENTUM:7.1>=5.5
- INSIDER:OK
- EARNINGS_PROXIMITY:16d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-1.1=NEGATIVE
Warning (2)
- DEATH_CROSS:momentum=7.1>=5.0 recovering
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-1.09
Upside
-13.4%
Downside
12.4%
Sizing output
AVOID
SetupMomentum Cont — Trend continuation, RSI 69, MACD bullish
EdgeCatalyst-Driven — Earnings in 16d with 3/4 beat streak
SuitabilityAggressive — MCap $4.0B<$5B
Investment implication
The F-path SELL output reflects an overall score of 4.6 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 7.1) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-1.1=NEGATIVE) reinforce the read. Current asymmetry R:R is -1.09 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 7.1, Value at 6.2, and Quality at 6.0; the weakest are Growth at 0.0, Technical at 1.6, and Peer rank at 4.5. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of -1.09 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Cyclical Earnings Decline Ahead
Trip ifForward EPS consensus rises more than 15% from current levels for 2 consecutive quarters, indicating the expected earnings decline is shallower than the ~75% feared.
- P2Price Above Resistance Negative Ratio
Trip ifPrice retraces below $75 for 5 consecutive trading days, resetting the reward/risk ratio above 1.0 relative to the $78.89 resistance target.
- P3Weak Free Cash Flow Conversion
Trip ifFree cash flow as a percentage of net income rises above 80% for 2 consecutive quarters, resolving the conversion shortfall.
- P4Confirmed 200ma Downtrend
Trip ifThe 200-day moving-average slope rises above 0% for 4 consecutive weeks, confirming a technical trend reversal.