FARM Should I Buy
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Farmer Bros Co (FARM) is not a strong buy for a beginner, long-term investor at this time. Despite the company's efforts to streamline operations, the financial performance is weak, with declining revenue, net income, and EPS. The technical indicators suggest no clear upward momentum, and the options data reflects low bullish sentiment. Additionally, the company's upcoming earnings report indicates potential further downside risks. For a beginner investor with a long-term focus, it is advisable to hold off on investing in FARM until there are clearer signs of financial recovery and growth.
The MACD is below 0 and negatively expanding, indicating bearish momentum. RSI is at 39.044, in the neutral zone, showing no clear trend. Moving averages are converging, and the stock is trading below the pivot level of 1.672, with support at 1.577 and resistance at 1.767. Overall, the technical indicators do not suggest a strong buy signal.
The company is actively streamlining operations to maximize profitability and has a Buy rating from Roth Capital despite reduced price targets. Revenue is expected to increase slightly by 0.5% YoY in the upcoming earnings report.
The company faces significant headwinds from reduced restaurant traffic and higher coffee prices. Financial performance in Q1 2026 showed a decline in revenue (-4.07% YoY), net income (-19.53% YoY), and EPS (-20.83% YoY). Gross margin also dropped by 9.39%. The consensus EPS estimate for Q2 2026 indicates a 1000% YoY decline, and the company has a poor track record of surpassing EPS and revenue estimates.
In Q1 2026, revenue dropped by 4.07% YoY to $81.6M. Net income declined by 19.53% YoY to -$4.025M. EPS fell by 20.83% YoY to -0.19, and gross margin decreased to 39.75%, down 9.39% YoY. These figures highlight significant financial struggles.
Roth Capital has lowered the price target from $3.50 to $3, maintaining a Buy rating. Analysts acknowledge the company's efforts to streamline operations but highlight near-term challenges from reduced restaurant traffic and higher coffee prices, which are likely to impact growth and margins.
