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Bear of the Day: Alico (ALCO)

Neena Mishra

Alico, Inc. (ALCO) is an agribusiness and land management company with approximately 130,800 acres of land in six Florida counties. ALCO is a leading citrus grower in Florida, with 11,000 producing acres.

Other principal lines of business are improved farmland including sugar cane, cattle ranching and conservation, and operations like rock mining.

Disappointing Quarterly Results

On Dec 9, 2013, ALCO reported the results for the fourth quarter of its fiscal year 2013. Total operating revenues were $6.7 million slightly up from $6.6 million for the prior-year quarter, mainly due to an increase in cattle sale revenues.

Total operating expenses were $4.9 million up 20% from $4.7 million for the Q4 of 2012, thanks to the increase in the cost of cattle sales. Gross profit was down 8.2% to $1.8 million from $2.0 million in the same quarter of previous fiscal year.

Net income was $11.8 million, or $1.60 per share, compared to a net loss of $0.5 million, or $0.07 per diluted share in the fourth quarter of fiscal 2012. The increase was due to the non-recurring sale of a conservation easement on approximately 11,600 acres, for $20.7 million in the third quarter of fiscal year 2013 resulting in a $20.3 million gain.

Excluding one-time charges, earnings were ($0.19) per share, significantly below the Zacks Consensus Estimate. Alico has delivered negative surprises in three out of last four quarters, with an average negative surprise of 55%.

Downwards Revisions
Quarterly and annual estimates have been revised sharply downwards in the past few weeks.
Zacks consensus estimate for the current quarter now stands at a $0.11 per share versus $0.18 per share, 30 days ago, while the full-year consensus estimate is now  $0.65 per share, down from $1.20 per share.

Downward estimates revisions sent Alico to a Zacks Rank # 5 (Strong Sell) last week.
The Bottom Line
ALCO is currently Zacks Rank # 5 (Strong Sell) stock and it has a longer-term recommendation of “Underperform”. Further the Zacks Industry rank of 187 out of 265 also indicates weakness in the near- to mid- term.  Thus we think investors should avoid this stock for the time being.

Investors looking for exposure to Agricultural Operations industry could look at Amira Nature Foods (ANFI)--a Zacks Rank #2 (Buy) stock with a “Neutral’ recommendation.  

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