Monday, August 6, 2007

Farmer Brothers Co.

Farmer Brothers Co. is a NASDAQ listed security that has been trading in a range between $19.51 and $24.48 over the past year. With 16,075,080 shares outstanding, a recent price of $21.22 gives a total market capitalization of $342,302,764. While there are certainly larger companies, Farmer Brothers Co. has definitely earned its place in the pack. Last year, Farmer Brothers Co. created $0.33 in earnings for every share outstanding.

Farmer Brothers Co. is currently priced by the market at 63.90 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share below $1 a share, Farmer Brothers Co. could be an interesting value proposition. Consistent earnings are the key to high valuations and this security is well on its way.