Bananas Over Lemons: Chiquita vs. Limoneria

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 |  Includes: CQB, LMNR
by: Efsinvestment

Chiquita Brand International (CQB) and Limoneria (LMNR.PK) are two companies doing business in agriculture, mostly producing fresh tropical vegetables. Chiquita is specialized at banana production, whereas Limoneria also engages in rental operations and real estate development. CQB’s market cap is $657.2 million, while LMNR has a market cap of $225 million. Although both companies are in the food business, they have different ratios, future, and past performances. Here is a brief analysis of CQB and LMNR (Data from Finviz)

Chiquita Brand International Inc.: The Ohio-based Chiquita is a banana producer and distributor, owning a 30% share in the global banana market. The company also produces other fresh products and sells under the brand Chiquita. Chiquita sells its product in North America, Europe, Middle East, Japan and Korea. Owning a market capital of $657.2 million, CQB has a P/E ratio of 7.38 and a forward P/E ratio of 7.5. Although the company reported a negative EPS growth over the last five years, earnings increased by 493.52% this quarter. PEG is 0.74, while P/S is 0.2 and P/B is 0.82. BB&T, Jefferies&Co, Standpoint, and Morgan Joseph recommend buying CQP shares.

Limoneira Company engages in agriculture, rental operations and real estate development. The company mainly produces lemons, avocados and other fresh fruits, and markets them in the North America and Asia. LMNR has a market cap of $225 million, with a current dividend yield of 0.63%. Earnings increased by 103.32% this quarter.

Historical Comparison (Data from Morningstar.)

2007

2008

2009

2010

TTM

P/E

CQB

-15.1

-2.0

8.9

10.6

7.4

LMNR

41.7

-52.1

400.0

1,250.0

P/B

CQB

0.9

1.5

1.2

0.9

0.8

LMNR

3.3

6.4

4.9

P/S

CQB

0.2

0.2

0.2

0.2

0.2

LMNR

2.7

4.7

6.3

4.2

P/CF

CQB

10.8

30.3

6.0

6.6

7.2

LMNR

21.0

-163.9

56.5

32.5

Dividend

CQB

--

--

--

--

--

LMNR

--

1.54%

0.22%

0.33%

0.63%

Gross Margin

CQB

12.4%

15.0%

16.7%

14.3%

15.3%

LMNR

28.9%

14.9%

38.0%

36.0%

Net Margin

CQB

-1.05%

-8.97%

2.61%

1.78%

2.80%

LMNR

6.04%

-9.01%

0.11%

-0.25%

Click to enlarge

The analysis of past data shows that the fundamental ratios of Chiquita have been more stable than those of Limoneira. As stated above, LMNR’s had P/E ratios of 41.7 for 2008, -52.9 for 2009, and 400 for 2010. Fluctuation of P/E ratio is too high to relieve investors. However, Chiquita is more stable with a P/E history like -2, 8.9 and 10.6. Limoneira Company split shares with a ratio of 10:1, in 2010.

Chiquita’s gross profit margin in 2010 was approximately 15%, while Limoneira's was higher at 30%. In 2008, CQB had a -8.97% profit margin, while LMNR brought 6% in the same year. The companies switched roles in 2009 as LMNR had a -9% profit margin and CQB brought 2.61%.

Comparing Chiquita with Limoneira is very much like comparing bananas with lemons. However, Chiquita is a world famous company with well established marketing contracts. If I had to make a choice between the two, I would prefer bananas over lemons.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.