The Q4 2014 earnings report for Dubai headquartered specialty Basmati rice stock Amira Nature Foods Ltd (NYSE: ANFI), a potential performance peer of other specialty food stocks like The Chefs Warehouse, Inc (NASDAQ: CHEF) and Israel based G Willi-Food International Ltd (NASDAQ: WILC), is due out before the market opens on Tuesday. Aside from the Amira Nature Foods Ltd earnings report, it should be said that The Chefs Warehouse, Inc reported Q1 2014 on May1st (results were negatively impacted by the severe weather that affected many of our core markets) while G Willi-Food International Ltd reported Q1 2014 earnings on May 28th (results were affected by a decline of consumption by Israeli customers). However, Amira Nature Foods Ltd shares fell as much as 22% after reporting third-quarter earnings back in February plus the stock is the sixth most shorted stock on the NYSE with short interest of 45.30% according to HighShortInterest.com.
What Should You Watch Out for With the Amira Nature Foods Ltd Earnings Report?First, here is a quick recap of Amira Nature Foods Ltd's recent earnings history from Yahoo! Finance:
| EPS Est | 0.24 | 0.10 | 0.17 | 0.28 |
| EPS Actual | 0.24 | 0.21 | 0.18 | 0.20 |
| Difference | 0.00 | 0.11 | 0.01 | -0.08 |
| Surprise % | 0.00% | 110.00% | 5.90% | -28.60% |
Back in late February, Amira Nature Foods Ltd reported that third quarter fiscal year end revenue increased 25.1% to $142.5 million and profit after tax increased 85.5% to $7.7 million but EPS actually came up a bit short verses the consensus. As a percentage of revenue, the cost of material increased to 75.4% in the third quarter compared to 73.5% for the same period last year due to increase in raw material prices. The Chairman/CEO commented:
"Based on our year-to-date performance and outlook for the final quarter, we remain confident in our ability to deliver a record year in fiscal 2014 and are raising our annual revenue and EBITDA guidance. Our business will benefit from recently announced key contracts, including the launch of Amira branded products in Reliance Retail Limited stores across India and our acquisition of a German branded business of basmati rice."
This time around and according to the Yahoo! Finance analyst estimates page, the consensus expects revenues of $162.20M and EPS of $0.33 - a decline from the EPS of $0.32 expected thirty days ago and $0.31 expected ninety days ago.
On the news front, the shorts have been trashing Amira Nature Foods Ltd on Seeking Alpha with the following articles that can only be read by subscribers:
Amira Nature Foods: More Questions, Fewer Answers Amira Nature Foods: New Risks Create More Than 50% Downside (This article was "removed from Seeking Alpha pending the resolution to a dispute") Even With A Pullback, Amira Nature Foods Not A Value StoryOn the other hand and according to a largely positive article on the Motley Fool, the following "red flags" were mentioned:
Arihaan Capital sees more than 50% downside for Amira on the basis of five factors: auditor resignation; misstatement in SEC filings; undisclosed related party potentially used to inflate margins; discrepancies in financials disclosed to SEC and Ministry of Corporate Affairs in India; and inflated revenue contribution from basmati rice exports.
In May, Jefferies downgraded Amira Nature Foods to Hold saying it will likely take time for the company to restore investor confidence. They also lowered their price target for shares to $15 from $25.
What do the Amira Nature Foods Ltd Charts Say?The latest technical chart for Amira Nature Foods Ltd (Note: None is available from Finviz) shows a downward trend since around March:
However, a performance chart shows that The Chefs Warehouse, Inc and G Willi-Food International Ltd have given investors less volatility:
Nevertheless, the technical charts for The Chefs Warehouse, Inc and G Willi-Food International Ltd show a clear downtrend for 2014:
Its really difficult to comment on the whether the accusations being thrown around by the shorts are true or not. What is almost certain though is that the 45.30% short interest will almost certainly cause an outsized move (in one direction or the other) on Amira Nature Foods Ltd shares.
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