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The price of an egg breakfast is back on the rise.
Egg prices have spiked in recent weeks due to a large bird flu outbreak that began over the summer. Paired with increased consumer demand, the outbreak is contributing to the higher price tag that we’re seeing at the grocery store.
Farmers have been battling for more than two years with a fatal strain of bird flu that continues to disrupt the U.S. egg supply. A deadly outbreak of H5N1 – a highly contagious strain of avian influenza – began in early 2022 and has since affected more than 100 million birds across the country, according to the Centers for Disease Control and Prevention (CDC).
Egg farmers are also subject to higher prices. Yes, the bird flu outbreak has impacted the supply chain. But producers are also grappling with higher prices for labor, packaging, and feed. And these expenses typically trickle down to the costs of the finished product, which are then passed on to consumers.
The latest Consumer Price Index (CPI) report from the Bureau of Labor Statistics showed that egg prices have risen 28.1% in the past year. The average price for a dozen large, grade A eggs was $3.20 in August:
Image Source: St. Louis Federal Reserve
Remember, that’s the average price that spans a variety of producers. I buy eggs from the Vital Farms brand every week (in fact, I just went to Whole Foods yesterday). A dozen large organic, pasture-raised eggs is a bit under $10. This is a premium product for health-conscious consumers, but in my opinion, it’s well worth it.
Total egg production fell 2.6% year-over-year in July according to newly-released data from the U.S. Department of Agriculture. The USDA also stated that the number of egg-laying birds dropped for the second consecutive month. Demand for eggs also tends to rise in the fall and winter seasons as baking trends reemerge and students go back to school.
Add it all up, and we have an enticing picture for egg farmers like Vital Farms from an investment perspective.
The Zacks Rundown
Vital Farms (VITL - Free Report) operates as a food company, providing pasture-raised products in the United States. The company offers shell eggs, butter, hard-boiled eggs, and liquid whole eggs. The stock is widely outperforming the market this year with the backing of a top industry group. Shares are displaying relative strength as buying pressure accumulates in this leading stock.
VITL stock is part of the Zacks Foods – Miscellaneous industry group, which currently ranks in the top 41% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months, just as it has consistently over the prior 3 months:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Earnings Trends and Future Estimates
Vital Farms has whipped together an impressive earnings history, surpassing earnings estimates in each of the past six quarters. Back in August, the company delivered second-quarter earnings of $0.36/share, which marked a 71.4% surprise over the $0.21/share consensus estimate.
The egg farmer delivered a trailing four-quarter average earnings surprise of 82.5%. Consistently beating earnings estimates is a recipe for success and bolsters the bullish case.
Vital shares received a boost as analysts covering the company have been increasing their 2024 earnings estimates lately; full-year earnings per share were raised 13.27% in the past 60 days. The Zacks Consensus Estimate now stands at $1.11 per share, reflecting an 88.1% jump relative to the prior year. Anticipated revenues of $595.7 million would equate to a 26.3% projected growth rate.
Image Source: Zacks Investment Research
Technical Outlook
VITL stock has advanced more than 120% this year alone. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Only stocks that are in extremely powerful uptrends are able to witness this type of price move. Shares broke out to a series of all-time highs earlier this year. After a recent pullback, VITL stock has regained key technical levels and appears to be entering the next leg of its uptrend:
Image Source: StockCharts
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Vital Farms has recently witnessed positive revisions. As long as this trend remains intact (and VITL continues to deliver earnings beats), the stock will likely continue its bullish run into the end of this year and beyond.
Bottom Line
Vital Farms is ranked favorably by our Zacks Style Scores, with a top ‘A’ mark in our Growth Category and ‘B’ in our Momentum category. This indicates that VITL stock is likely to move higher based on promising earnings and sales growth metrics, in addition to prevailing momentum characteristics.
A combination of relatively low supply and increasing demand for eggs bodes well for Vital Farms. Make sure to keep an eye on this leading stock as markets kick off the fourth quarter.
Disclosure: Vital Farms is a current holding in the Zacks Headline Trader portfolio.
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Morning Omelet? Vital Farms Surges Amid Egg Price Spike
The price of an egg breakfast is back on the rise.
Egg prices have spiked in recent weeks due to a large bird flu outbreak that began over the summer. Paired with increased consumer demand, the outbreak is contributing to the higher price tag that we’re seeing at the grocery store.
Farmers have been battling for more than two years with a fatal strain of bird flu that continues to disrupt the U.S. egg supply. A deadly outbreak of H5N1 – a highly contagious strain of avian influenza – began in early 2022 and has since affected more than 100 million birds across the country, according to the Centers for Disease Control and Prevention (CDC).
Egg farmers are also subject to higher prices. Yes, the bird flu outbreak has impacted the supply chain. But producers are also grappling with higher prices for labor, packaging, and feed. And these expenses typically trickle down to the costs of the finished product, which are then passed on to consumers.
The latest Consumer Price Index (CPI) report from the Bureau of Labor Statistics showed that egg prices have risen 28.1% in the past year. The average price for a dozen large, grade A eggs was $3.20 in August:
Image Source: St. Louis Federal Reserve
Remember, that’s the average price that spans a variety of producers. I buy eggs from the Vital Farms brand every week (in fact, I just went to Whole Foods yesterday). A dozen large organic, pasture-raised eggs is a bit under $10. This is a premium product for health-conscious consumers, but in my opinion, it’s well worth it.
Total egg production fell 2.6% year-over-year in July according to newly-released data from the U.S. Department of Agriculture. The USDA also stated that the number of egg-laying birds dropped for the second consecutive month. Demand for eggs also tends to rise in the fall and winter seasons as baking trends reemerge and students go back to school.
Add it all up, and we have an enticing picture for egg farmers like Vital Farms from an investment perspective.
The Zacks Rundown
Vital Farms (VITL - Free Report) operates as a food company, providing pasture-raised products in the United States. The company offers shell eggs, butter, hard-boiled eggs, and liquid whole eggs. The stock is widely outperforming the market this year with the backing of a top industry group. Shares are displaying relative strength as buying pressure accumulates in this leading stock.
VITL stock is part of the Zacks Foods – Miscellaneous industry group, which currently ranks in the top 41% out of more than 250 Zacks Ranked Industries. Because it is ranked in the top half of all Zacks Ranked Industries, we expect this group to outperform the market over the next 3 to 6 months, just as it has consistently over the prior 3 months:
Image Source: Zacks Investment Research
Historical research studies suggest that approximately half of a stock’s price appreciation is due to its industry grouping. In fact, the top 50% of Zacks Ranked Industries outperforms the bottom 50% by a factor of more than 2 to 1.
It’s no secret that investing in stocks that are part of leading industry groups can give us a leg up relative to the market. By focusing on leading stocks within the top 50% of Zacks Ranked Industries, we can dramatically improve our stock-picking success.
Earnings Trends and Future Estimates
Vital Farms has whipped together an impressive earnings history, surpassing earnings estimates in each of the past six quarters. Back in August, the company delivered second-quarter earnings of $0.36/share, which marked a 71.4% surprise over the $0.21/share consensus estimate.
The egg farmer delivered a trailing four-quarter average earnings surprise of 82.5%. Consistently beating earnings estimates is a recipe for success and bolsters the bullish case.
Vital shares received a boost as analysts covering the company have been increasing their 2024 earnings estimates lately; full-year earnings per share were raised 13.27% in the past 60 days. The Zacks Consensus Estimate now stands at $1.11 per share, reflecting an 88.1% jump relative to the prior year. Anticipated revenues of $595.7 million would equate to a 26.3% projected growth rate.
Image Source: Zacks Investment Research
Technical Outlook
VITL stock has advanced more than 120% this year alone. This is the kind of stock we want to include in our portfolio – one that is trending well and receiving positive earnings estimate revisions.
Only stocks that are in extremely powerful uptrends are able to witness this type of price move. Shares broke out to a series of all-time highs earlier this year. After a recent pullback, VITL stock has regained key technical levels and appears to be entering the next leg of its uptrend:
Image Source: StockCharts
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. As we know, Vital Farms has recently witnessed positive revisions. As long as this trend remains intact (and VITL continues to deliver earnings beats), the stock will likely continue its bullish run into the end of this year and beyond.
Bottom Line
Vital Farms is ranked favorably by our Zacks Style Scores, with a top ‘A’ mark in our Growth Category and ‘B’ in our Momentum category. This indicates that VITL stock is likely to move higher based on promising earnings and sales growth metrics, in addition to prevailing momentum characteristics.
A combination of relatively low supply and increasing demand for eggs bodes well for Vital Farms. Make sure to keep an eye on this leading stock as markets kick off the fourth quarter.
Disclosure: Vital Farms is a current holding in the Zacks Headline Trader portfolio.