Mission Produce Inc. (AVO Quick QuoteAVO - Free Report) remains under pressure, with its share price trending downward amid persistent market concerns over potential supply-chain disruptions in Mexico, problems that are further amplified by uncertainty surrounding tariff developments. Ongoing tariff threats between North American countries, including a temporary 25% avocado import tariff, have created volatility.

In the past three months, the company’s shares have lost 12.1%, underperforming the broader Agricultural - Operations industry and the Consumer Staples sector’s growth of 5.2% and 2.3%, respectively. The AVO stock also lagged the S&P 500’s decline of 1.3% in the same period.

AVO’s performance is also notably weaker than its close competitors, Archer Daniels Midland Company (ADM Quick QuoteADM - Free Report) , Calavo Growers (CVGW Quick QuoteCVGW - Free Report) and Corteva (CTVA Quick QuoteCTVA - Free Report) , which posted growth of 3.6%, 15.9% and 10.5%, respectively, in the same period.

Mission Produce’s Three-Month Price Performance

Image Source: Zacks Investment Research

At the current price of $10.77, the AVO stock price is 12.9% above the company’s 52-week low of $9.54. The Mission Produce stock is trading 29.4% below its 52-week high of $15.25, reflecting upside potential. The stock trades above its 50-day moving average (SMA) and below its 200-day SMA, indicating a mixed sentiment.

AVO Stock Trades Below 200-Day & Above 50-Day SMAs

Image Source: Zacks Investment Research

Mission Produce’s Valuation

AVO’s current forward 12-month price-to-earnings (P/E) multiple of 26.7X raises concerns about whether the stock's valuation is justified. This multiple is significantly higher than the Zacks Agriculture - Operations industry average of 15.54X, making the stock appear relatively expensive.

Image Source: Zacks Investment Research

The price-to-sales ratio of Mission Produce is 0.68X, above the industry’s 0.46X. This adds to investor unease, which suggests it may not be a strong value proposition at the current levels.

At 26.7X P/E, AVO trades at a significant premium to its industry peers. The company’s peers, such as Archer Daniels, Calavo Growers and Corteva, are delive ring solid growth and trade at more reasonable multiples. Archer Daniels, Calavo Growers and Corteva have forward 12-month P/E ratios of 11.73X, 12.69X and 21.9X — all significantly lower than that of AVO. At such levels, Mission Produce’s valuation seems out of step with its growth trajectory.

The AVO stock currently seems somewhat overvalued, and a premium valuation may suggest that investors have strong expectations for its growth.

Let us explore the reasons behind the company’s disappointing movement on the bourses and assess if there is potential for growth.

AVO Faces Market Pressure Amid Supply-Chain, Margin Woes

Mission Produce continues to face downward pressure in its share price, driven largely by persistent investor concerns over potential sourcing constraints and macroeconomic volatility. At the heart of these concerns is the anticipated tightening of avocado supply from Mexico, a region central to AVO’s procurement strategy. While industry-wide avocado volumes are expected to remain relatively flat year over year, the shortfall in Mexican output poses a significant risk to revenue stability, particularly as the company navigates elevated demand.

Although AVO plans to offset the Mexican supply dip by ramping up volumes from California and Peru, the transition introduces logistical complexities. These include variable fruit sizing, shipping timelines, and reliance on alternative supply chains that may lack the efficiency or scale of Mexico’s established infrastructure. Any disruption or delay can impact service levels and strain customer relationships, which are the key concerns for a company dependent on reliability and freshness.

Compounding these risks are broader geopolitical uncertainties, particularly around North American trade policy. The recent imposition and temporary lifting of a 25% tariff on Mexican avocados injected volatility into the supply chain and highlighted Mission's vulnerability to external regulatory shifts. While the company has maintained deliveries during that period, the brief disruption raised red flags about longer-term stability.

In parallel, the Peruvian blueberry segment offers both promise and peril. On the positive side, the company projects a 35-40% increase in overall harvest volume this season, with 20% of the crop expected to be sold in the fiscal second quarter, aligned with last year’s timing. This reflects strong yield improvements and acreage expansion, suggesting growing operational scale and efficiency.

However, the pricing environment is concerning. Average per-unit selling prices for blueberries have declined 33% year over year, driven by supply normalization after last year’s weather-related shortages. While volume gains may help support net sales, sustained pricing pressure can weigh on margins, particularly if cost controls fall short or competitive dynamics intensify.

Taken together, these factors have heightened investor caution. From sourcing volatility and pricing pressures to trade policy risks and margin compression, Mission Produce faces a complex landscape. The company’s ability to navigate these operational and external challenges in the coming quarters will be critical to restoring investor confidence and stabilizing its share performance.

Mission Produce’s Estimate Revision Trend

The Zacks Consensus Estimate for Mission Produce’s fiscal 2025 and 2026 EPS has been unchanged in the past 30 days. For fiscal 2025, the Zacks Consensus Estimate for AVO’s sales and EPS implies 6.6% and 37.3% year-over-year declines, respectively. The consensus mark for fiscal 2026 sales and earnings indicates year-over-year decreases of 3.2% and 7.1%, respectively. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Image Source: Zacks Investment Research

Positive Trends Supporting AVO's Long-Term Outlook

Mission Produce is well-positioned for long-term success, anchored by its robust global sourcing network and integrated operational model. By aligning sales strategy with sourcing capabilities, the company efficiently meets demand while protecting per-unit margins — a formula that has driven consistent performance in its core Marketing & Distribution segment.

AVO’s ability to execute across a diversified global supply chain is a clear competitive advantage. Its emphasis on operational excellence, disciplined capital deployment, and targeted growth initiatives underscores a business built for resilience and scale, which are critical strengths amid industry volatility.

The avocado segment continues to validate AVO’s strategic direction. In first-quarter fiscal 2025, the company achieved a 25% year-over-year increase in average selling prices, reflecting strong demand and effective pricing. A projected 5% price increase in the fiscal second quarter suggests that this momentum will continue.

Strategic sourcing diversification is also a strength. Increased volumes from California and Peru are expected to offset tightening supply from Mexico, while continued investment in Latin America, particularly in Guatemala, enhances sourcing flexibility and regional risk management.

Consumer trends further support AVO’s outlook. Global demand for avocados continues to rise, driven by health-conscious consumers and expanding adoption in emerging markets. Mission’s international farming capabilities and streamlined distribution position it to capitalize on this growth.

While near-term challenges remain, Mission Produce’s proactive diversification, supply-chain agility, and long-term focus provide a strong foundation for sustained profitability and market leadership.

How to Play Mission Produce’s Stock?

While AVO’s premium valuation and recent share performance may prompt caution, its strong fundamentals, anchored by a global sourcing network and vertically integrated operations, highlight its clear competitive edge. Supported by rising avocado prices, steady execution and a solid market position, AVO is well-positioned to maintain its growth trajectory.

For investors, Mission Produce offers an attractive opportunity to gain exposure to a growing global produce market, with room for improved financial efficiency and long-term value creation. Although the recent stock pullback creates a compelling entry point for long-term investors seeking quality in the agricultural space, a higher valuation prompts caution. The company has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.