Blueplace/E+ via Getty Images With Alico ( NASDAQ: ALCO ) recently reporting fiscal second-quarter results, I thought it would be timely to take another look at the company, as it has been several months since I last wrote about Alico. Since my last article, we are well on our way into the 2023/2024 citrus-grove harvest, which should start to see improvements from the Hurricane Ian-induced weakness. Furthermore, the company recently sold off the Alico ranch lands in December, leaving the business as a pure-play bet on orange groves.
Is Alico still significantly undervalued after the latest results? In my opinion, yes. My conservative estimate of fair value for Alico points to more than 60% upside, based purely on liquidating its citrus groves at market prices. If we were to add in potential margin expansion from the renegotiation of the Tropicana contract and re-development potential of its citrus groves, fair value should be even higher.
I continue to rate Alico as a speculative buy for long-term value investors. Brief Company Overview For those not familiar with Alico, the small-cap company is one of the largest citrus growers in the U.S.
primarily supplying fruit for Tropicana juices. The company owns ~54,500 acres of land in Florida, including ~49,000 acres of prime citrus groves (Figure 1). Figure 1 - Alico overview (ALCO investor presentation) Hurricane Ian Caused Write-off Year In 2023 Historically, Alico had been a fairly profitable business, with $20-35 million in ne.