Alico ALCO operates as an agribusiness and land management company that grows citrus trees, produces citrus, farms cattle, sugarcane, sod, and manages land for conservation and mining activities in Florida. However, ALCO, assigned a Zacks Rank #5 (Strong Sell), is part of the Zacks Agriculture – Operations industry group, which is ranked in the bottom 13% of over 250 Zacks Ranked Industries. This ranking implies that this industry group will likely underperform the market in the next 3 to 6 months. Historically, candidates in the bottom-ranking industries can be potential short candidates.
Technical Analysis:
ALCO has a sustained downtrend, having plunged below the 200-day moving average (indicated by the red line) and displaying a series of lower lows in its share price, with no respite from the selling in sight. The 200-day moving average is sloping down, which is another indication of a bearish trend. Also, the stock has experienced a ‘death cross,’ where the 50-day moving average (blue line) crosses below its 200-day moving average, adding to its bearish outlook. With ALCO’s deteriorating fundamental and technical backdrop, it is unlikely to see fresh highs anytime soon.
Recent Earnings:
In the past four quarters, ALCO has delivered an average earnings miss of -449.78%. Moreover, it has fallen short of earnings estimates in three out of the past four quarters. The Q2 fiscal year 2023 earnings report showed a loss of $1.62 per share; this missed the estimated $0.13 per share by -1,346.15%. The poor performance can be attributed to decreased revenues following the fallout from Hurricane Ian, which resulted in reduced fruit production.
Negative Growth:
ALCO is experiencing negative earnings estimate revisions; analysts have decreased its estimates by -186.17% for the current fiscal year, leading to a -1,180.95% regression relative to fiscal 2022 in the 2023 Zacks Consensus EPS Estimate.
Final Thoughts:
ALCO has a weakening outlook, according to Zacks Style Scores, as it is rated a worst-possible ‘F’ in its Value category and ‘F’ for the overall VGM score. With its history of earnings misses and falling future earnings estimates, ALCO is likely to trend downwards. Additionally, it is part of one of the worst-performing industry groups, which provides yet another headwind to a long list of concerns. Therefore, potential investors may want to avoid taking long positions in the stock but include it as part of a short or hedge strategy. Until the situation shows significant signs of improvement, bulls should steer clear of ALCO.
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