Motley Fool Hidden Gems recommendation Fresh Del Monte Produce (NYSE:FDP) had "no comment" as rumors swirled that JPMorganChase (NYSE:JPT) has been hired to auction the company.

TheDeal.com reported Friday, based on five alleged sources, that Fresh Del Monte could fetch $1.8 billion. IAT Group, a corporation controlled by Fresh Del Monte's CEO and 52% owner, is said to be looking to sell its stake. The reported price is eight times trailing earnings before interest, taxes, depreciation, and amortizations. Friday's news sent the stock up 8.2%; trading volume was six times higher than it's been, on average, over the last three months.

As recently as April, the stock was trading above $31 a share, for a market capitalization of $1.8 billion. It has been on a slow drift downward ever since; the stock set a 52-week low on Dec. 9, the day the company lowered earnings guidance for the current quarter. Soft banana prices and slower-than-expected pineapple sales in November caused analysts to lower fourth-quarter earnings estimates from $0.36 to $0.09 a share.

Analysts still expect the company to earn $2.23 per share next year, a lowly 10.8 times forward earnings. But given its recent problems with its key banana and pineapple products, 2006 results could swing wildly in either direction.

For now, investors should remember that they'll be shooting in the dark if they buy on this rumor. There's no guarantee that an auction can be completed for an acceptable price (or even one above current market levels). Auction or no auction, Fresh Del Monte's earnings weakness could extend into 2006. Given its current fundamentals, I believe this stock's already trading at a fair price.

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Fool contributor W.D. Crotty does not own any shares in the companies mentioned. Click here to see The Motley Fool's disclosure policy.