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Mission Produce Faces Headwinds Before Q4 Earnings: Buy, Hold or Sell?
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Key Takeaways
AVO's Q4 sales are projected at $312.3M, suggesting an 11.9% y/y dip, with EPS expected to fall 32.1%.
AVO gains from higher avocado volumes, Mexico-Peru sourcing transition, and growing blueberry and mango sales.
AVO faces near-term headwinds from soft demand, tariff uncertainty and shifting customer mix, hurting margins.
Mission Produce Inc. (AVO - Free Report) is likely to witness top and bottom-line declines when it reports fourth-quarter fiscal 2025 results on Dec. 18, after market close. The Zacks Consensus Estimate for fiscal fourth-quarter sales is pegged at $312.3 million, indicating an 11.9% decrease from the year-ago quarter's reported figure.
The consensus estimate for the company's fiscal fourth-quarter earnings is pegged at 19 cents per share, suggesting a 32.1% decline from the year-ago quarter’s actual. Earnings estimates have been unchanged in the past 30 days.
The Oxnard, CA-based company has been reporting steady earnings outcomes, as evident from its top and bottom-line surprise trends in the trailing four quarters. Mission Produce delivered an earnings surprise of 533.3% in the trailing four quarters, on average. Given its positive record, the question is, can AVO maintain the momentum?
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for AVO this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Mission Produce’s fourth-quarter fiscal 2025 results are likely to be shaped by a combination of higher industry volumes, disciplined execution and continued progress across its diversification strategy. Management expects industry avocado volumes to rise 15% year over year in fourth-quarter fiscal 2025, driven by ample Peruvian supply late in the season and a transition to a larger Mexican crop, supported by favorable weather conditions.
A key driver in the fiscal fourth quarter is expected to be the company’s ability to efficiently manage the Peru-to-Mexico sourcing transition. Investments in Mexican packhouse enhancements are expected to improve peak-season capacity, boost throughput of owned fruit and create system-wide efficiencies, supporting margins despite lower pricing. The International Farming segment is expected to continue benefiting from recovered Peruvian yields, offsetting margin normalization in Marketing & Distribution.
Beyond avocados, diversification has been an important growth lever. The blueberry business is entering its peak harvest season in the fourth and first quarters, with productive acreage expanding to more than 700 hectares. Management expects meaningful volume growth, although lower pricing may partially offset revenue gains in fourth-quarter fiscal 2025. Mangoes are also gaining traction, supported by strategic pricing, improved supply consistency and expanded retail programs.
From a margin perspective, the gross margin is likely to have moderated sequentially due to pricing pressure, but operational efficiencies, higher owned-farm volumes and improving facility utilization are anticipated to have helped preserve profitability. Overall, fourth-quarter fiscal 2025 results are expected to reflect strong execution in a higher-volume environment, reinforcing Mission Produce’s platform for consistent results even amid cyclical pricing headwinds.
Mission Produce’s ongoing investments in vertical integration, digital innovation and geographic diversification are expected to have improved operational efficiency and asset utilization, particularly in its International Farming segment. This sets the stage for longer-term margin recovery despite near-term cost pressures and tariff uncertainties.
However, Mission Produce is expected to have faced headwinds in fourth-quarter fiscal 2025 tied to demand elasticity and customer behavior. Softer consumer spending is anticipated to have limited retailers’ willingness to run aggressive avocado promotions, constraining volume pull-through despite ample supply. Customer mix shifts, particularly toward lower-margin foodservice or promotional retail programs, are expected to have pressured profitability. Currency volatility in sourcing regions and selling markets poses another risk, potentially impacting reported revenues and costs.
AVO’s Price Performance & Valuation
Mission Produce’s shares have exhibited a downtrend in the past three months, losing 0.4% compared with the industry’s fall of 8.7% and the Zacks Consumer Staples sector’s decline of 3.2%. Meanwhile, the company has underperformed the S&P 500’s growth of 4.2%.
Mission Produce’s 3-Month Performance
Image Source: Zacks Investment Research
The AVO stock has outperformed industry peers, including Archer Daniels Midland Company (ADM - Free Report) , Corteva Inc. (CTVA - Free Report) and Calavo Growers (CVGW - Free Report) , which have declined 1.5%, 6.8% and 22.1%, respectively, in the past three months.
At its current price of $12.74, the AVO stock trades 33.3% above its 52-week low of $9.56. Moreover, Mission Produce’s current stock price stands 16.5% below its 52-week high of $15.25.
From the valuation standpoint, the company trades at a forward 12-month P/E multiple of 26.54X, exceeding the industry average of 12.19X and the S&P 500’s average of 23.35X.
The premium valuation suggests that investors have strong expectations for Mission Produce’s future performance and growth potential. However, the stock currently seems somewhat overvalued. As a result, investors may be hesitant to buy at these elevated levels and prefer to wait for a more favorable entry point.
Image Source: Zacks Investment Research
Investment Thesis
Mission Produce continues to reinforce its position as a global avocado leader, supported by scale, disciplined execution and a clearly defined strategy. Its vertically integrated model and diversified sourcing footprint enhance supply reliability and operational efficiency, helping manage the volatility inherent in agricultural markets. With sourcing across Mexico, Peru, Colombia and Guatemala, the company maintains flexibility while commanding a meaningful share of global avocado supply.
Beyond avocados, Mission Produce is expanding into complementary, higher-growth categories, such as blueberries and mangoes, improving revenue diversification and reducing the dependence on a single crop cycle. Ongoing investments in farming assets, infrastructure and value-added capabilities should support margin durability over time.
Tariff uncertainty remains a near-term risk, particularly given Mexico’s importance to sourcing. Temporary tariffs earlier this year pressured margins and highlighted geopolitical exposure. However, Mission Produce’s diversified supply network and operational agility position it well to absorb such disruptions. Overall, while short-term volatility may persist, the company’s scale, diversification and execution discipline underpin a compelling long-term growth thesis.
Conclusion
Mission Produce’s long-term growth profile remains supported by its vertically integrated model, diversified global sourcing network and expanding multi-category portfolio focused on health-forward food staples. These strengths position the company to benefit from steady consumer demand over time. However, near-term performance may remain influenced by external factors such as inflation, elevated interest rates and tariff-related uncertainty, which may continue to pressure margins in the near term.
From a financial perspective, the company has shown progress in improving adjusted earnings and EBITDA, aided by better asset utilization and expanding farming operations. Investments in digital tools and supply-chain capabilities are helping improve operational efficiency. That said, valuation levels and near-term volatility may prompt some investors to remain cautious. Overall, Mission Produce presents a balanced outlook, with solid structural positioning tempered by cyclical risks and execution-dependent outcomes.
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Mission Produce Faces Headwinds Before Q4 Earnings: Buy, Hold or Sell?
Key Takeaways
Mission Produce Inc. (AVO - Free Report) is likely to witness top and bottom-line declines when it reports fourth-quarter fiscal 2025 results on Dec. 18, after market close. The Zacks Consensus Estimate for fiscal fourth-quarter sales is pegged at $312.3 million, indicating an 11.9% decrease from the year-ago quarter's reported figure.
The consensus estimate for the company's fiscal fourth-quarter earnings is pegged at 19 cents per share, suggesting a 32.1% decline from the year-ago quarter’s actual. Earnings estimates have been unchanged in the past 30 days.
The Oxnard, CA-based company has been reporting steady earnings outcomes, as evident from its top and bottom-line surprise trends in the trailing four quarters. Mission Produce delivered an earnings surprise of 533.3% in the trailing four quarters, on average. Given its positive record, the question is, can AVO maintain the momentum?
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for AVO this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that is not the case here. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Mission Produce has an Earnings ESP of 0.00% and a Zacks Rank of 3. You can see the complete list of today's Zacks #1 Rank stocks here.
Key Insights on Trends to Define AVO’s Q4 Results
Mission Produce’s fourth-quarter fiscal 2025 results are likely to be shaped by a combination of higher industry volumes, disciplined execution and continued progress across its diversification strategy. Management expects industry avocado volumes to rise 15% year over year in fourth-quarter fiscal 2025, driven by ample Peruvian supply late in the season and a transition to a larger Mexican crop, supported by favorable weather conditions.
A key driver in the fiscal fourth quarter is expected to be the company’s ability to efficiently manage the Peru-to-Mexico sourcing transition. Investments in Mexican packhouse enhancements are expected to improve peak-season capacity, boost throughput of owned fruit and create system-wide efficiencies, supporting margins despite lower pricing. The International Farming segment is expected to continue benefiting from recovered Peruvian yields, offsetting margin normalization in Marketing & Distribution.
Beyond avocados, diversification has been an important growth lever. The blueberry business is entering its peak harvest season in the fourth and first quarters, with productive acreage expanding to more than 700 hectares. Management expects meaningful volume growth, although lower pricing may partially offset revenue gains in fourth-quarter fiscal 2025. Mangoes are also gaining traction, supported by strategic pricing, improved supply consistency and expanded retail programs.
From a margin perspective, the gross margin is likely to have moderated sequentially due to pricing pressure, but operational efficiencies, higher owned-farm volumes and improving facility utilization are anticipated to have helped preserve profitability. Overall, fourth-quarter fiscal 2025 results are expected to reflect strong execution in a higher-volume environment, reinforcing Mission Produce’s platform for consistent results even amid cyclical pricing headwinds.
Mission Produce, Inc. Price and EPS Surprise
Mission Produce, Inc. price-eps-surprise | Mission Produce, Inc. Quote
Mission Produce’s ongoing investments in vertical integration, digital innovation and geographic diversification are expected to have improved operational efficiency and asset utilization, particularly in its International Farming segment. This sets the stage for longer-term margin recovery despite near-term cost pressures and tariff uncertainties.
However, Mission Produce is expected to have faced headwinds in fourth-quarter fiscal 2025 tied to demand elasticity and customer behavior. Softer consumer spending is anticipated to have limited retailers’ willingness to run aggressive avocado promotions, constraining volume pull-through despite ample supply. Customer mix shifts, particularly toward lower-margin foodservice or promotional retail programs, are expected to have pressured profitability. Currency volatility in sourcing regions and selling markets poses another risk, potentially impacting reported revenues and costs.
AVO’s Price Performance & Valuation
Mission Produce’s shares have exhibited a downtrend in the past three months, losing 0.4% compared with the industry’s fall of 8.7% and the Zacks Consumer Staples sector’s decline of 3.2%. Meanwhile, the company has underperformed the S&P 500’s growth of 4.2%.
Mission Produce’s 3-Month Performance
Image Source: Zacks Investment Research
The AVO stock has outperformed industry peers, including Archer Daniels Midland Company (ADM - Free Report) , Corteva Inc. (CTVA - Free Report) and Calavo Growers (CVGW - Free Report) , which have declined 1.5%, 6.8% and 22.1%, respectively, in the past three months.
At its current price of $12.74, the AVO stock trades 33.3% above its 52-week low of $9.56. Moreover, Mission Produce’s current stock price stands 16.5% below its 52-week high of $15.25.
From the valuation standpoint, the company trades at a forward 12-month P/E multiple of 26.54X, exceeding the industry average of 12.19X and the S&P 500’s average of 23.35X.
The premium valuation suggests that investors have strong expectations for Mission Produce’s future performance and growth potential. However, the stock currently seems somewhat overvalued. As a result, investors may be hesitant to buy at these elevated levels and prefer to wait for a more favorable entry point.
Image Source: Zacks Investment Research
Investment Thesis
Mission Produce continues to reinforce its position as a global avocado leader, supported by scale, disciplined execution and a clearly defined strategy. Its vertically integrated model and diversified sourcing footprint enhance supply reliability and operational efficiency, helping manage the volatility inherent in agricultural markets. With sourcing across Mexico, Peru, Colombia and Guatemala, the company maintains flexibility while commanding a meaningful share of global avocado supply.
Beyond avocados, Mission Produce is expanding into complementary, higher-growth categories, such as blueberries and mangoes, improving revenue diversification and reducing the dependence on a single crop cycle. Ongoing investments in farming assets, infrastructure and value-added capabilities should support margin durability over time.
Tariff uncertainty remains a near-term risk, particularly given Mexico’s importance to sourcing. Temporary tariffs earlier this year pressured margins and highlighted geopolitical exposure. However, Mission Produce’s diversified supply network and operational agility position it well to absorb such disruptions. Overall, while short-term volatility may persist, the company’s scale, diversification and execution discipline underpin a compelling long-term growth thesis.
Conclusion
Mission Produce’s long-term growth profile remains supported by its vertically integrated model, diversified global sourcing network and expanding multi-category portfolio focused on health-forward food staples. These strengths position the company to benefit from steady consumer demand over time. However, near-term performance may remain influenced by external factors such as inflation, elevated interest rates and tariff-related uncertainty, which may continue to pressure margins in the near term.
From a financial perspective, the company has shown progress in improving adjusted earnings and EBITDA, aided by better asset utilization and expanding farming operations. Investments in digital tools and supply-chain capabilities are helping improve operational efficiency. That said, valuation levels and near-term volatility may prompt some investors to remain cautious. Overall, Mission Produce presents a balanced outlook, with solid structural positioning tempered by cyclical risks and execution-dependent outcomes.