Cal-Maine Foods (NASDAQ:CALM) will release its quarterly report on Monday, and the egg specialist has fully recovered from the share-price struggles it faced earlier in the year. Yet even as a more favorable environment has helped both Cal-Maine and dairy peers Dean Foods (NYSE:DF) and WhiteWave Foods (NYSE:WWAV) post similarly solid stock returns lately, Cal-Maine earnings could suffer a short-term dip before hopefully resuming their upward trajectory over the long run.

Cal-Maine's business seems simple, but navigating the changing trends in the agriculture industry is a lot harder than it looks. The company's problems in dealing with high feed costs hurt its results late last year and early this year. Yet as Cal-Maine finds ways to benefit from its size and the evolving demand of its customers, its business prospects look more favorable. Let's take an early look at what's been happening with Cal-Maine Foods over the past quarter and what we're likely to see in its report.

Stats on Cal-Maine Foods

Analyst EPS Estimate

$0.33

Change From Year-Ago EPS

(15.4%)

Revenue Estimate

$296.73 million

Change From Year-Ago Revenue

8.7%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Will Cal-Maine earnings feed investors well this quarter?
Analysts have offered mixed views in recent months on the prospects for Cal-Maine earnings, cutting their estimates for the quarter that ended in August by a penny per share but boosting full-year fiscal 2014 projections by $0.12 per share. The stock has been volatile but has generally moved higher, rising more than 6% since late June.

Cal-Maine's gains came in the wake of strong results in its previous quarter. The egg producer saw sales for the period jump 18%, with a 6% increase in the number of eggs produced as Cal-Maine benefited from higher volume capacity enabled by acquisitions. Even though feed costs have continued to climb, which was partially responsible for the company's net loss for the quarter, Cal-Maine has continued to make the most of its market. Moreover, the company settled a class action price-fixing lawsuit for $28 million, putting to rest allegations that it kept production levels low in a deliberate attempt to boost egg prices.

Consolidation has been a key part of Cal-Maine's overall strategy. The company specifically noted its acquisition of the egg business of Pilgrim's (NASDAQ:PPC) last year as helping to boost sales. With the egg industry fragmented, such opportunities will continue to be important for Cal-Maine.

Another growth opportunity is in specialty products. Trends toward healthier foods have pushed specialty-egg volumes up 7.8% over the past year, and a 6% increase in specialty-egg prices demonstrates the value of tailoring offerings for the niche market. Specialty eggs now make up almost a quarter of Cal-Maine's shell-egg sales.

That demand is consistent with what we've seen in the dairy industry. WhiteWave Foods has developed a lower-calorie milk beverage tailored to those seeking an alternative even to conventional skim milk. Dean Foods, which has focused more on the traditional milk business, has seen substantial production overcapacity as customers reduce their regular-milk demand. That's raising concerns that after its spinoff of WhiteWave, Dean might not have the fundamental business strength to be a strong investment opportunity.

In the Cal-Maine earnings report, watch to see whether the trend toward specialty eggs has continued this quarter. If so, it'll be worth Cal-Maine's time to examine that trend further and shift production even more toward the higher-margin side of the egg business.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool owns shares of Dean Foods and WhiteWave Foods. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.