Bufetico
Mike Puglisi, a second-generation egg farmer, didn’t lose a single hen in the bird flu outbreak that sent egg prices to a record, and by February he was losing money anyway. His company, Puglisi Egg Farms, has two farms, in Delaware and New Jersey, and they turn out 486 million eggs a year.
The outbreak killed 50 million egg-laying hens, CNN reported, citing the American Egg Board. People kept buying eggs while there were fewer hens to lay them, so stores ran short and prices hit records. Then farmers restocked, supply shot back up, and by February wholesale egg prices were down to 92 cents a dozen. It cost an average farm 98 cents to $1.05 to produce a dozen, according to an agricultural economist at the University of Arkansas. Puglisi called the speed of the fall “remarkable.”
The farmers who did lose birds had it much worse, he said. They’d been out of business for a while, and they came back just as the losses started. It’s what he worried about in 2022, when his own farm got bird flu and he lost his entire flock.
So in four years Puglisi has been through the year he lost the whole flock, a year of record egg prices, and now a stretch of losing money. Before you can put a value on a business like that, you have to decide which of those years to start from.
Any model that projects a company’s cash into the years ahead has three levers: how fast the cash can grow, how far it can fall, and which year it starts from. I cap how fast, because a few strong years say very little about the next few, and a valuation that lets a hot streak run ends up made almost entirely of the streak. I also put a floor under how far, because a company shrinking fast enough, year after year, stops being something you can value. You’d be pricing its disappearance.
CNN wrote that lost birds and low prices together could put smaller egg producers out of business, and the head of the American Egg Board warned that family farms would be lost if things stayed this way. A floor gets that case wrong. If a company is going away for good, the floor keeps my number too high. The alternative is a precise figure for something that’s stopped being a business.
Where the projection starts is the lever nobody argues about. The growth rate comes from the middle of a whole stretch of years, where one odd year can’t pull it around, but the number it grows is one year’s cash, and the obvious pick is the latest full year. Egg farmers went from record prices to selling at a loss in about a year, and whichever of those years you picked as the number to grow, you’d be growing one odd year of the business. In my own model, that lever did the most damage of the three, on Amazon: the latest year gave a small number because the model counted everything Amazon spent to grow as money lost, and what fixed it was to stop counting that spending as a loss. That changed what the latest year counted. The model starts from the latest year all the same, so that lever is still open.
Cal-Maine Foods, the largest egg company in the United States, went through the same boom and bust, and it files its numbers with the SEC. It splits its eggs into conventional ones and specialty ones, like cage-free and organic, and almost all the conventional ones are priced, at least in part, off the wholesale market. In the year to May 31, 2025, the year of the record prices, its conventional eggs made $1,290.0 million after the costs of producing and selling them. The next year they made $216.6 million. The annual report says their sales fell mainly because prices did, and that volumes were relatively flat. Start a projection from the record, and every year after it inherits a bird-flu price.
Where this breaks
Both limits are blunt. The cap treats a company that really will keep growing fast exactly like one that won’t, and it’ll be wrong about that company every year until the growth stops. The floor makes the same mistake the other way, and a bad stretch of a cycle can look just like a real decline, which is a test of its own. Being wrong by a limited amount about a few companies is the trade I made, and it saves me from being wrong without limit about many.
The starting year is harder. My model won’t start from a year when the recent cash has gone negative, and the company’s square stays gray, with no figure in it. A record year looks healthy all the way down the page, so that rule never sees it, and a warning next to the figure only catches some of the odd years that are left. I don’t have a rule for the rest that wouldn’t also catch companies that are simply doing badly, which is a different thing, so the gap stays where you can see it. And the Cal-Maine figures above are the conventional eggs’ own profit, after the costs of producing and selling them and nothing else. My model projects the whole company’s cash, which rose and fell with the conventional eggs.
Puglisi’s flock
Cal-Maine’s annual report shows three years side by side, and the oldest is the year before the record. In that year, to June 1, 2024, its conventional eggs made $213.7 million. In the year to May 30, 2026, they made $216.6 million. Put the record between those two and it looks like one odd year between two normal ones. A projection that started from the latest full year started from the record for a whole year, until the next report came out. Earlier in that same report, next to its wholesale price chart, Cal-Maine says bird flu had a significant effect on egg prices in all three of those years, fiscal 2024 through 2026, and the report for the record year says the same of fiscal 2023 through 2025. So the year before the record was a bird-flu year too, and the one before that, fiscal 2023, was a boom of its own: Cal-Maine says the wholesale egg price it quotes fell 34 percent the next year as supply recovered from the bird flu that ran through most of 2022. That’s the outbreak that took Puglisi’s whole flock.