Mission Produce Rides on Price Volatility: Can it Sustain Growth?

Mission Produce Inc. AVO, a global avocado leader, has navigated price swings by leveraging its vertically integrated model. With sourcing spread across Mexico, Peru, Colombia and Guatemala, and control over ripening and logistics, the company remains resilient to regional disruptions. This structure has helped Mission Produce capitalize on high demand, even in supply shortages, boosting average selling prices and driving top-line growth.

AVO started fiscal 2025 on a strong note, with revenues increasing 29% year over year, driven by a 25% increase in per-unit avocado pricing and expanding sales of mangoes and blueberries. This pricing strength came amid tight avocado supply from Mexico, forcing Mission Produce to rely heavily on co-packers and the spot market, at the expense of margins. However, adjusted EBITDA fell 5%, and profit margins tightened, underscoring the risks of price normalization and rising input costs despite strong revenue momentum.

Looking ahead, AVO expects lower avocado pricing to be balanced by higher Peruvian volumes. The company continues investing in farming assets, tech-driven packing solutions and new categories to diversify earnings. Its sustained growth will depend on execution, margin control and its ability to scale emerging products like mangoes and blueberries. The real test will be maintaining momentum as market volatility persists.

AVO Faces Stiff Competition From CVGW & FDP

Calavo Growers, Inc. CVGW remains a close rival in the avocado space, and like Mission Produce, it has been impacted by unstable supply out of Mexico and fluctuations in global demand. The company has faced declining margins due to rising fruit costs and logistical challenges, prompting ongoing restructuring efforts, including a focus on operational efficiency and tighter cost controls. However, Calavo’s earnings remain sensitive to short-term price swings in avocados, especially when supply and demand are misaligned. Its exposure to fewer diversified product lines compared with AVO makes it more vulnerable to single-crop volatility.

Fresh Del Monte Produce Inc. FDP, with a broader portfolio that includes bananas, pineapples, melons and avocados, also contends with price instability across multiple categories. While diversification helps buffer the company from crop-specific shocks, it still faces macro-level pressures, such as inflation, climate variability and geopolitical events that impact sourcing costs and global distribution. Fresh Del Monte has focused on improving supply chain integration and expanding value-added offerings to mitigate margin erosion, yet the perishability of fresh produce and shifting pricing dynamics continue to present profitability challenges.

AVO’s Price Performance, Valuation & Estimates

Shares of Mission Produce have gained 20.8% in the last three months compared with the industry’s growth of 18.5%.

From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 24X, significantly above the industry’s average of 15.53X.

The Zacks Consensus Estimate for AVO’s fiscal 2025 and 2026 earnings suggests a year-over-year decline of 20.3% for both years. The estimates for fiscal 2025 and 2026 have been unchanged in the past 30 days.

AVO stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

This article originally published on Zacks Investment Research (zacks.com).

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