When it rains, it pours.

Shares of Motley Fool Hidden Gems selection Fresh Del Monte Produce (NYSE:FDP) are down 6% to $25 after the company cut its full-year 2004 earnings forecast by almost 20%. The laundry list of reasons cited for the weaker outlook included weak banana pricing, lower melon profitability in the U.S., difficult growing conditions in Costa Rica, and the recent hurricanes affecting tomato crops in Florida.

As a result, the producer and marketer of fruits and vegetables now expects full-year earnings to come in at $2.05 to $2.15 per share, rather than $2.55 to $2.65.

According to CEO Mohammad Abu-Ghazaleh, the company had factored in soft banana pricing, but that pricing has been even weaker than expected. He also said that while the fresh-cut and pineapple businesses continue to perform, margins are coming in weaker than expected in the company's other businesses.

At first glance, the surprising thing would be that the stock is down only 6%. But the advantage to owning cheaper stocks is downside protection, and Fresh Del Monte generally qualifies as a cheaper stock at 12 times this year's revised earnings forecast. The stock is also trading at less than seven times last year's earnings of $3.65 per share.

The clues as to why the stock is priced this way seem pretty apparent. Just glancing over fellow Fool W.D. Crotty's earnings coverage over the past few quarters, you get the idea that Fresh Del Monte's earnings are anything but predictable.

At least in the short term, the stock market tends to reward some amount of predictability on top of actual production of cash flow. The counterpoint is that, going over Tom Gardner's review in the August 2004 edition of Hidden Gems, I gather that he believes the company's continued product diversification and acquisitions -- such as the $340 million agreement with Del Monte Foods Europe over the summer (see Producing a Great Acquisition) -- will help smooth out cash flow growth in the future.

In the long run, what matters is that you think you've got the right price. If you follow Tom's reasoning, then you can regard today's earnings guidance revision as what poker players call a bad beat: a statistical improbability that produces a short-term hiccup in what will be a profitable long-term result.

For more on Fresh Del Monte, check out:

Fool contributor Jeff Hwang owns none of the companies mentioned above.