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By Rayk Riechmann
With the final major citrus harvest finished in its third fiscal quarter, Alico, Inc. (Nasdaq: ALCO) completed a major strategic shift towards transforming into a diversified land management company.
Finalizing this key milestone in the company’s transitioning process allows financial and operational resources to be redirected towards high-potential initiatives in line with the new business strategy. To unlock scalable and less volatile revenue streams, ALCO now focuses on land development, conservation projects and alternative agricultural uses.
Adding to the transformational momentum, land sales are already ahead of target for fiscal year 2025, exceeding original guidance by $3.5 million. This strong asset monetization provides additional resources to advance new strategic focal points.
Financial results are undergoing a transitional period that should be temporary, clearing the way for a cleaner and more lucrative set of revenue streams. Overall revenue from citrus operations declined reasonably by 41%, which is to be expected. But looking ahead, management reaffirmed the fiscal 2025 EBIDTA guidance of $20 million, so investors should keep their eye on the prize.
As a baseline, our own DCF analysis that takes future land sales as a basis for cash-flow run rate, we arrive at an upside potential of 7% in the stock. However, the valuation can be far higher if long-term developments and positive land price movements are taken into consideration.
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