Adecoagro (AGRO)
has been a frustrating name for quite some time, and one where nobody
has really made any money on a long-term basis for the better part of
three years. All of that comes despite a very efficient sugar/ethanol
business, a low-cost farming operation, and a land bank that has
consistently yielded healthy premiums to the appraised values. Weak
sugar prices and volatile crop prices continue to do their damage,
though, and it will take a little while longer before investments made
into the rice and dairy businesses provide any real benefits.
This
year (2019) will likely be the peak capex year for the company’s
five-year capex plan, a plan that management believes will lead to
EBITDA of around $400 million and FCF of $200M on a run-rate basis by
the end of 2021. The Street continues to price in far, far less than
that, though. I continue to believe that Adecoagro is undervalued on a
long-term basis, but at some point it is fair to ask just how long
investors can be expected to wait for that value to show up in the share
price.
Read the full article here:
Adecoagro Continues To Underperform Despite A Respectable Underlying Business
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