Mar. 19 at 11:59 PM
$CALM Just a brush stroke analysis of the acquisition today. CALM bought Creighton (& subsidiaries) for 128.5mn. Creighton has 500,000 cage free chickens and 865,000 pullet hens. Cage free chickens produce slightly less than an egg a day (26 hours) and pullets produce one egg a day. That is 175mn new cage free eggs (14.5mn dozen) and 311.4mn (25.9mn dozen) new eggs.
Multiplied by the deflated current cost of eggs (
$5/dozen cage free &
$3/dozen pullets) you get a total revenue in year one of 150.7mn.
Multiply the rev by CALM existing profit margin (brush stroke analysis...ik) of 27.4%, year one profit is
$41.2mn or 32.1% of the acquisition cost. This transaction pays itself off in three years (excluding the additional egg themed coffee shop revenue or other rev sources).
Just to keep in mind, CALM financed this with cash on their sexy balance sheet. Discount rate 0.
Buy this company for the long-term. Stable, predictable, dominant, strong balance sheet, and great cap allocation.