Mission Produce, Inc. AVO is positioned to benefit from higher avocado production in Peru and the integration of Calavo Growers. These developments are expected to support seasonal growth, expand customer reach and improve operating efficiencies. However, elevated industry supplies and pricing pressure remain key concerns.
Mission Produce expects exportable production from its Peruvian farms to reach 120-130 million pounds in fiscal 2026, up from 105 million pounds in the previous season. Approximately 53 million pounds had been sold through the end of the third quarter, leaving a significant portion for the fourth quarter. The company expects higher sales from its owned Peruvian crop, along with a seasonal increase in blueberry activity, to drive stronger fourth-quarter results. Improved farming productivity, better yields and an expanded distribution network across Europe, North America and other markets support its confidence in selling the remaining crop at acceptable returns.
The company's International Farming segment typically generates stronger contributions during the second half, coinciding with Peru's avocado harvest season. However, abundant global avocado supplies could weigh on selling prices and farming margins. In addition, the acquisition of Calavo expands Mission Produce's customer base, sourcing flexibility, packing capacity and presence in prepared foods, including guacamole. The company has raised its annualized cost synergy target to more than $30 million from at least $25 million, primarily reflecting higher-than-anticipated selling, general and administrative savings and network efficiencies.
Third-quarter avocado volumes increased 38% year over year, but average selling prices declined 9%. Gross margin contracted 270 basis points to 9.9%. Abundant supply could continue to pressure prices and profitability. Overall, Peru's harvest and Calavo's integration offer meaningful growth opportunities for Mission Produce by expanding its avocado operations, strengthening sourcing and distribution capabilities, and broadening its customer base. The combined platform could support higher revenues, improved operational efficiencies and stronger profitability over time.
AVO’s Competition
Dole plc DOLE is benefiting from strong demand for fresh produce, disciplined pricing actions and improved operational execution. Dole is also expanding internal production and diversifying its sourcing network, particularly across key Latin American markets such as Guatemala, to secure reliable supplies while reducing supply-chain risks. Dole is also investing in high-growth categories such as cherries and citrus by increasing production capacity and upgrading packing operations to meet rising customer demand.
Adecoagro S.A. AGRO is a leading South American agribusiness and renewable energy player, strengthening its position across the broader consumer and agricultural markets. AGRO’s ability to flex production between sugar and ethanol based on market conditions provides greater operational flexibility and helps optimize returns. Adecoagro is also investing in digital transformation, renewable energy and precision agriculture to enhance productivity, improve efficiency and optimize costs.
AVO’s Price Performance, Valuation and Estimates
Mission Produce shares have lost 15.6% in the past six months against the industry’s 13.6% growth.
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From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 14.31X compared with the industry’s average of 16.05X.
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The Zacks Consensus Estimate for AVO’s fiscal 2026 earnings per share (EPS) indicates a year-over-year decline of 17.7%, but that of fiscal 2027 shows growth of 33.9%. The company’s EPS estimates for fiscal 2026 have been stable, while fiscal 2027 estimates have increased in the past 30 days.
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Mission Produce currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Mission Produce, Inc. (AVO): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).