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Alico trades at a large discount to Net Asset Value

Alico is one of the largest citrus growers in the United States. The Florida based company owns an abundance of citrus and cattle grazing property. It appears that the stock trades at a pretty big discount to net asset value. This stock might be right for folks who like deep value.

The stock trades for $29.8, there are 8.25 million shares, and the market cap is $248.9 million. Earnings per shares were a loss of $1.14 in the fiscal year which ended in September. The dividend is 24¢ and the dividend yield is 0.8%.

With the hurricane last year, earnings were down from $6.959 million in 2016 to a loss of $9.496 million in 2017. Crop production was lower 17.1%. What is impressive is that free cash flow was still positive. Cash flow from operations were $28.229 million, capex was $13.353 million, and free cash flow was $16.822 million. The vast majority of revenues comes from citrus and a small amount from cattle grazing and other agriculture. Management expects that it will take two years for the trees to fully recover from the storm.

The balance sheet shows $3.4 million in cash, $4.3 million in receivables, $21 million in assets for sale, and a whopping $349 million in property and equipment. The last number does not take into effect rises in property values. The liability side shows $3.1 million in payables and $185 million in debt.

Alico owns approximately 122,000 acres of land in twelve Florida counties (Alachua, Charlotte, Collier, DeSoto, Glades, Hardee, Hendry, Highlands, Lee, Martin, Osceola and Polk) including approximately 90,000 acres of mineral rights. 47,532 acres are used for citrus and 70,962 for cattle grazing.

The company has a goal of reducing per acre expenses from $3,314 to $2,164. It plans to plant 400,000 more trees by the end of this year. In total, Alico plans to ship 10 million boxes of oranges a year. The company purchased three citrus farms for $363 million in 2015. At the time, debt jumped from $58.44 million to $200.97 million. Since then, debt has been reduced by about $10 million a year. Sales jumped from $104 million to $153 million when the purchases were made.

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