Jim Cramer weighs egg producer Vital Farms as its stock dips due to accounting issues

CNBC’s Jim Cramer on Thursday reviewed the stock of Vital Farms, an egg producer that had a tough day on the market after it posted impressive earnings but also disclosed an accounting issue. Cramer cautioned investors against owning shares of any outfit with accounting irregularities, but suggested it could be worthwhile to revisit Vital Farms once it remedies bookkeeping problems, as it seems to be “a good company with an enticing stock.”

“I have to stay on the sidelines here. See, I’ve got a hard-and-fast rule that says … accounting irregularities equal sell,” he said. “While this specific accounting issue doesn’t actually seem that bad at first glance, I created these rules for a reason, and virtually every time I’ve gone against them, it’s blown up in my face.”

Vital Farms’ shares spiked at the beginning of Thursday’s session soon after the report, but by close the stock had declined more than 9%. The outfit managed to beat expectations, seemingly eschewing the worst of the deadly avian flu that has plagued the industry. Management acknowledged some supply constraints, but indicated they expect business to accelerate later in the year as supply chain investments start to pay off.

However, these earnings results were overshadowed by problems with order tracking and invoices, which Vital Farms attributed to ineffective risk management and lack of resources. The company admitted “there is a reasonable possibility that a material misstatement to the financial statements would not be prevented or detected on a timely basis.” While Cramer said the problems don’t seem to be severe, he stressed that it’s difficult to trust the numbers after this kind of statement.

The company is a premium brand already known for higher prices, touting humane practices and pasture-raised eggs. While egg prices across the country have skyrocketed — and the government recently projected prices could further increase 41.1% in 2025 — Vital Farms CEO Russell Diez-Canseco said the company hasn’t had to raise prices in over a year. Cramer suggested this pricing control gives Vital Farms an edge, as their products could seem less expensive compared to competitors that have issued significant hikes. However, he said the company may lose this edge if President Donald Trump’s new strategies to curb the flu outbreak works and competitors bring prices back down.

“To be clear: I hope the government’s plans work, because I want lower egg prices for you, for me, for everybody,” he said. “It’s just that the lower egg prices, not good news for Vital Farms.”

Vital Farms did not immediately respond to request for comment.

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