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Falling farm incomes this year and a projected widening trade deficit are dampening the outlook for the U.S. agricultural industry. Therefore, it may be best to avoid the fundamentally weak agricultural strains Alico (ALCO) and Agriforth (AGRI). read more.
U.S. farm incomes are expected to decline for the first time since 2019 this year. This is due to higher production costs, lower government payments, and lower prices for commodities and livestock. Therefore, the agricultural strain Alico (Arco) and AgriFORCE Growing Systems Ltd. (Aguri) may be best avoided given its bleak fundamentals.
The USDA forecasts net farm income of $136.9 billion this year. About 16% down from the previous year. Adjusted for inflation, net farm income is projected to decline by $30.5 billion, or 18.2%.
Furthermore, the 2023 U.S. agricultural export forecast is: Down to $190 billionThis is the second highest agricultural export level since 1990. Agricultural import forecasts are also expected to increase to record levels.
As a result, the US agricultural trade deficit is projected to widen this year to $9 billion, the largest in decades.
High inflation, high borrowing costs and labor shortages continue to affect the agricultural industry.
Let’s take a closer look at the stocks above.
Ariko Co., Ltd. (Arco)
ALCO operates in the United States as an agribusiness and land management company. The company operates in two segments: Alico Citrus and his land management and other businesses.
Arco’s Forward EV/Sales of 5.70 is 250.7% higher than the industry average of 1.62. The forward price/sales multiple of 3.33 is 193.7% higher than the industry average of 1.14. Future EV/EBITDA multiple of 30.90, 158.7% above the industry average of 11.94.
ALCO’s total operating revenues decreased 31% year-over-year to $10.59 million in the first quarter ended December 31, 2022. His adjusted EBITDA was negative $3.44 million, compared with his positive $2.37 million in the same period last year.
Additionally, adjusted net loss attributable to common stockholders increased 252.5% year-over-year to $6.35 million and adjusted net loss per common share increased 250% year-over-year to $0.84.
Analysts expect ALCO’s revenue to decline 43.6% year-over-year to $28 million in the current fiscal quarter ending March 2023. EPS for the quarter is expected to decline 95.3% year-over-year to $0.13. The company has failed to beat its EPS estimates in each of his last four quarters, which is disappointing.
The stock has fallen 31.8% over the past nine months and closed its last trading session at $24.04.
Arcos POWR rating It reflects this bleak outlook. The stock has an overall rating of F, which equates to a strong sell on our proprietary rating system. POWR Ratings evaluate stocks by 118 different factors, each with its own weighting.
ALCO is rated F for Growth and Value and D for Stability and Momentum. It ranks 24th out of 25 stocks with a D rating. Agriculture industry.
In addition to the POWR rating grades above, you have access to ALCO’s sentiment and quality ratings. here.
AgriFORCE Growing Systems Ltd.Aguri)
AGRI is an agriculture-focused technology company focused on developing and commercializing plant-based ingredients and products that provide healthier and more nutritious solutions. The company operates through his two divisions, AgriFORCE Solutions and AgriFORCE Brands.
AGRI’s forward EV/sales multiple of 1.90 is 16.80% higher than the industry average of 1.62. The forward price/sales multiple of 1.51 is 33.3% higher than the industry average of 1.14.
AGRI’s operating loss increased 97.1% year-over-year to $13.66 million for the fiscal year ended December 31, 2022. Net loss increased 93.8% year-over-year to $12.97 million, with net loss attributable to common stock increasing 7.6%. $0.71 year-over-year %.
Street expects AGRI’s EPS to be negative $0.68 for the fiscal year ending December 2023. Revenue for the quarter is expected to be $8.4 million.
The stock has fallen 85.7% over the past year, closing its last trading session at $0.70.
AGRI’s challenging outlook is reflected in its POWR rating. This stock has an overall F rating, which translates to a strong sell on the POWR rating system.
AGRI has an F grade for value and quality and a D grade for stability. Ranked 26th in the industry.
To see additional POWR ratings on AGRI’s Growth, Sentiment and Momentum, visit click here.
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ALCO shares were unchanged in pre-market trading on Monday. Year-to-date, ALCO is up his 0.71%, while the benchmark S&P 500 index is up his 3.88% over the same period.
About the Author: Nidhi Agarwal
Nidhi’s passion for capital markets and wealth management inspired him to pursue a career as an investment analyst. She has a Bachelor’s degree in Finance and Marketing and is pursuing the CFA program. Her fundamental approach to stock analysis helps investors identify the best investment opportunities.
post 2 agricultural strains without red meat and potatoes first appeared StockNews.com