Shares of Cal-Maine Foods, recognized as the leading egg producer in the United States, experienced a decline during after-hours trading on Tuesday. This drop followed the company’s announcement that it is under investigation by the antitrust division of the U.S. Department of Justice.
Based in Ridgeland, Mississippi, Cal-Maine reported receiving notice last month about the investigation, which focuses on recent egg price increases. The company assured that it is working in cooperation with the authorities on this matter.
Following the disclosure, Cal-Maine’s stock saw a decrease of over 4% in after-hours trading.
Egg prices have surged to unprecedented levels in recent months, a situation primarily caused by a bird flu outbreak. The epidemic has led to the culling of more than 166 million birds, with a significant portion being egg-laying hens.
In February, the average price for a dozen Grade A eggs reached $5.90 in U.S. urban areas, marking a 10.4% increase over the previous year’s figure. This exceeded the January record-high price of $4.95.
The substantial rise in egg prices has increased scrutiny on Cal-Maine, which accounts for about 20% of the egg supply in the country.
On the same day, Cal-Maine reported that its sales nearly doubled, reaching $1.42 billion in the fiscal third quarter, which ended on March 1. This boost in sales is primarily attributed to the rise in egg prices, which averaged $4.06 per dozen during the quarter, compared to $2.25 per dozen in the previous year.
Despite the impressive growth, Cal-Maine’s sales still fell short of Wall Street’s expectations, which were pegged at $1.43 billion by analysts surveyed by FactSet.
The company disclosed that it sold a record 331.4 million dozens of eggs in the third quarter, a 10% increase over the same period last year.
To counteract the impact of bird flu, Cal-Maine stated that efforts were made to increase the number of layer hens and hatch chicks. It also managed to recover from bird flu-related facility closures in Texas and Kansas. The company noted that feed costs had decreased during the period as well.
Cal-Maine announced that its net income for the third quarter more than tripled, reaching $508.5 million. This equated to $10.38 per share, which fell short of analysts’ predictions that projected a $10.72 per-share profit.