1. Ryan Seong Anthony Sorrentino Presented December 6, 2016
Cal-Maine Foods, Inc.
Ryan Seong
Anthony Sorrentino
Presented December 6, 2016
Real Client Managed Portfolio

2. Real Client Managed Portfolio
Agenda
Current Holding
Company and its Business
Macroeconomic Overview and Drivers
Industry Overview and Analysis
Technical Analysis
Financial Analysis
Competitors
Valuations
Recommendation
Real Client Managed Portfolio

3. Real Client Managed Portfolio
Current Holding
Historical Transactions and Valuations
12/16/2015 – Bought 100 at $47.68
Current Price $39.75
Realized Return
1/25/16 Dividend Paid $0.751
4/25/16 Dividend Paid $0.441
Total: 1.192/$47.68 = 2.51% (HPR)
Unrealized Return
Price Depreciation: / = (16.63%)
52 Week Range: $35.65 – $55.43
Market Cap: $1.93B
Dividend Yield: % (1.76)
P/E:
Extra Notes:
Products & Services Breakdown
Eggs
Specialty Eggs
Hatching Eggs
SUPPLY CHAIN:
Selling Industries
Animal Food Production
Meat Production
Corn, Wheat, & Soybean Wholesaling
Farm Supplies Wholesaling
Market Segmentation Breakdown
Retailers
Processors and Manufacturers
Food-Service establishments
Exports
Source: finance.yahoo.com
Real Client Managed Portfolio

4. Business Overview
Feed mills
Breeder flocks
Hatcheries
Pullet growing
Egg production
Processing and Packaging
Sales and Distribution
Largest producer and marketer of shell eggs in the United States
Founded 1957 in Mississippi
Fully integrated operations
Production, grading, packaging, marketing and distribution of shell eggs
Growth strategy: Pursuit of acquisitions to grow layer base and broaden geographic reach
19 acquisitions since 1989
Products Non-specialty eggs, Specialty Eggs, Egg Products
Specialty Brands: Egg-Land’s Best, Land O’ Lakes, Farmhouse, 4-Grain
Real Client Managed Portfolio
Sources: K, calmainefoods.com

5. Real Client Managed Portfolio
SWOT Analysis
Strengths
Economies of scale
Fully integrated operations
Strong customer relationships
Determined management team
Weaknesses
Litigations (Antitrust)
Top 10 customers account for 70% of sales
Disposal Liabilities
EPA regulations for manure
Marketing tactics to promote egg nutrition facts (vitamins, minerals, and protein)
Opportunities
Growing demand for specialty eggs
Greater geographical coverage
Changing consumer preferences
Threats
Volatility of egg and feed prices
Up to 40%, often cannot pass higher feed prices to buyers
Moderate regulation
Risk of diseases
Outbreaks of avian disease
Real Client Managed Portfolio
Sources: IBISWorld, Hoover’s,

6. Macroeconomic Drivers
Sources: census.gov, calmainefoods.com, IBISworld.com
Real Client Managed Portfolio

7. Revenue Volatility: High Capital Intensity: High
Industry Overview
Selling Industries
Corn, Wheat, & Soybean Wholesaling
Farm Supplies Wholesaling
Animal Food Production
Chicken & Turkey Meat Production
Life Cycle: Mature
Revenue Volatility: High
Capital Intensity: High
Regulation: Moderate
Real Client Managed Portfolio
Sources: IBISWorld, Hoover’s

8. Real Client Managed Portfolio
Industry Analysis
Key Success Factors:
Use of specialist equipment/facilities
Technology to breed, feed mixes, climate control improves quality of output
Efficiency
Long-term sales contracts
Large-scale supply contracts with downstream consumers
Location
Proximity to key markets
Reduce storage and transit time
Growing conditions
Favorable weather locations
Boosts production volume and quality of eggs
Production of specialty eggs
Profitability margins increase
Trends:
Health Perceptions –
Health studies linking eggs to heart disease
American Egg Board fought back and reverse the perception
Specialty eggs segment, lower volatility
Processed-egg products (egg whites and egg yolks in liquid and dry forms) – Convenience and storage
HPAI –
Revenue growth
Falling feed costs (70% of production expenses)
Corn, wheat, and soybean
Regulations regarding cage space and trade
Replace old equipment
International Trade –
Exports (4.1%)
Imports (2.9%)
Real Client Managed Portfolio
Sources: IBISWorld, Hoover’s

9. . Porter’s 5 Forces Forces Level Factors Threat of New Entrants
Moderate
Threat of Substitutes
Supplier Bargaining Power
Low
Buyer Bargaining Power
Competitive Rivalry
High
Forces
Level
Factors
Threat of New Entrants
Moderate
Costs of capital equipment
Industry regulations (USDA, EPA, license)
Threat of Substitutes
Meat production industry
Compete on price, taste, convenience and nutrition
Supplier Bargaining Power
Low
Corn, wheat, and soybean wholesaling industry
Low differentiation, high competition
Buyer Bargaining Power
Retail sector accounts for 55% of revenue (options for brand loyal and price sensitive consumers)
Competitive Rivalry
High
Internal: Egg grades (appearance, color, strength, and size), specialty eggs, & price
Source: IBISWorld, Hoover’s
Threat of New Entrants:
Cost of Capital Equipment:
Chicken egg farm
Laying houses and automatic feeding systems
Regulations:
Land and water permits
Environmental laws regarding food safety USDA
EPA Disposal of waste
Competitive Rivalry:
Internal:
Brand Loyal Customers – Quality of eggs (diet of laying birds, housing conditions, and age)
Price Sensitive Customers – Compete on low prices
External:
Protein – Compete on price, taste, convenience, and nutrition
Real Client Managed Portfolio

10. Real Client Managed Portfolio
Technical Analysis
Source: bigcharts.com
Real Client Managed Portfolio

11. Real Client Managed Portfolio
Financial Analysis
Real Client Managed Portfolio

12. Real Client Managed Portfolio
Competitors
Real Client Managed Portfolio

13. Real Client Managed Portfolio
Competitors
Real Client Managed Portfolio

14. Comparable Companies Company Comparable Set Ticker Latest Close Price
Market Capitalization (Millions)
Enterprise Value (Millions)
Sanderson Farms, Inc.
SAFM
81.09
1830.9
1,587.9
Industrias Bachoco S.A.B de C.V.
IBA
45.76
2287.5
1,709.6
Pilgrim's Pride Corporation
PPC
17.38
4368.1
5,296.9
Cal-Maine Foods, Inc.
CALM
40.95
1987.3
1,706.5
Poultry producer in Mexico and United States:
Breeding, processing, and marketing of chicken, eggs, swine, and animal feed. Also offers turkey and beef products.
United States integrated poultry processing:
Produces, processes, markets, and distributes chicken products
Operations in United States, Mexico, and Puerto Rico:
Produces, processes, markets, and distributes chicken products. Also offers fresh chicken products.
Real Client Managed Portfolio

15. Real Client Managed Portfolio
Comparable Valuation
Company Comparable Set
TEV/Total Revenue (30%)
TEV/EBITDA (20%)
TEV/EBIT (20%)
P/E (30%)
Sanderson Farms, Inc.
0.59
5.21
7.15
13.00
Industrias Bachoco S.A.B de C.V.
0.72
5.43
8.47
14.17
Pilgrim's Pride Corporation
0.66
6.08
7.60
10.22
Cal-Maine Foods, Inc.
1.11
6.96
8.52
13.93
Summary
High
1.11
6.96
8.52
14.17
Low
0.59
5.21
7.15
10.22
Mean
0.77
5.92
7.93
12.83
Median
0.69
5.76
8.03
13.46
Implied Share Price
High
37.13
Low
25.79
Mean
31.18
Median
30.90
Analysis
35.51
Real Client Managed Portfolio

16. DCF Valuation - Assumptions
Real Client Managed Portfolio

17. Real Client Managed Portfolio
DCF Valuation
Implied Price: $39.46
Real Client Managed Portfolio

18. DCF Valuation – Sensitivity Analysis
Real Client Managed Portfolio

19. Real Client Managed Portfolio
Recommendation
Implied Price
$37.88
HOLD
DCF Valuation
$39.46
Comparable
Valuation
$35.51
60%
40%
Real Client Managed Portfolio