New York,NY - January 20, 2014 (www.investorideas.com newswire) On January 17, 2014, Taglich Brothers released an updated research report on Alico, Inc., (ALCO) and reiterated a Neutral rating. The report noted the following key investment considerations:
The latest forecast (January 2014) from the USDA is for a 13% decrease in Florida citrus production (oranges and grapefruit) in 2014. As citrus selling prices are projected to rise only modestly, we project a 12% reduction in Alco’s citrus revenue. We expect a 4% reduction in sugarcane revenue in FY14, as a decrease in production per acre and decreased selling prices more than offset a 26% increase in harvested acreage.
Helping to offset the expected reductions in citrus and sugarcane revenue in 2014 should be a 12% increase in ranch and conservation revenue as the cattle breeding herd is 9% larger than last year and beef selling prices are projected to rise 3% according to IBISWorld.
In November 2013, 734 Agriculture and Arlon Group completed the acquisition of approximately 51% of Alico's outstanding voting stock from Atlantic Blue Group at $37.00 per share. Clay G. Wilson, a third generation citrus grower associated with the citrus industry for more than 28 years will serve as CEO of Alico, replacing JD Alexander.
Alico reported (on 12/9/13) 4Q13 $1.60 EPS on revenue of $6.7 million. We projected revenue of $6.8 million and EPS of $1.70 per share. In the year earlier quarter Alico lost $0.07 per share on revenue of $6.6 million. The results for 4Q13 include a $2.75 per share pre-tax gain related to the sale of a conservation easement on approximately 11,600 acres of land.
For FY14, we project revenue of $93 million and EPS of $0.65, down from our previous forecast of revenue of $106 million and EPS of $1.20 primarily due to reduced citrus production. For FY15, we project revenue of $94.4 million and EPS of $0.72.
Alico owns and manages approximately 130,000 acres of land in five Florida counties. The company generates most of its revenue from agricultural businesses such as citrus production, sugarcane production and cattle ranching. Alico’s non-agricultural operations include land leasing, rock and sand mining, mineral and oil leasing, and real estate development.
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