Volume Up, Price Down: Can AVO Balance Growth With Profitability?

Mission Produce Inc. AVO, a global leader in sourcing, producing and distributing fresh produce, is navigating a critical phase in its growth journey. Amid a dynamic agricultural market shaped by shifting consumer preferences and global supply chain pressures, the company is leaning into a volume-driven strategy to strengthen its competitive positioning. With robust demand for healthy, convenient fruits like avocados, mangos and blueberries, AVO is aggressively scaling its operations across key geographies to capitalize on long-term consumption trends.

Mission Produce has reported a significant increase in volume across its core product categories, especially avocados, mangos and blueberries. Avocado volumes are poised to surge, with the Peruvian crop expected to increase by more than 100% this season, following a weather-hit harvest last year. Similarly, record mango volumes and expanded blueberry acreage have bolstered overall production. AVO’s strong grower relationships and global sourcing flexibility have allowed the company to secure products from multiple regions, supporting its ability to meet rising global demand and penetrate new markets like Europe and the U.K.

However, this volume surge comes with the challenge of managing downward price pressure. AVO expects avocado prices to decline by 10-15% year-over-year due to greater supply in the U.S. and international markets. While this could boost overall consumption, it also compresses gross margins. In the second quarter of 2025, although average per-unit selling prices rose, margin pressure was evident due to sourcing challenges in Mexico and tariff-related costs. The company notes that rising volumes can hurt profits if not backed by strong efficiency.

AVO Faces Stiff Competition From CVGW & FDP

Mission Produce operates in a highly competitive fresh produce market, facing rivalry from both global and regional players specializing in avocados and other perishable fruits. Key competitors include Calavo Growers, Inc. CVGW and Fresh Del Monte Produce Inc. FDP.

Calavo is a well-established company in the avocado sector, known for its integrated operations that span from farming and packing to marketing and distribution. The company has a strong presence in both fresh and processed avocado products, including guacamole and other value-added items. Calavo serves a broad customer base across retail, foodservice and wholesale channels. Its strategy emphasizes product quality, consistent supply and expanding its value-added portfolio to drive growth. However, Calavo has also faced challenges tied to sourcing complexities in Mexico and operational disruptions, which it is working to mitigate through diversification and efficiency initiatives.

Fresh Del Monte is a global leader in fresh and prepared produce, offering a wide range of fruits and vegetables, including avocados, pineapples and melons. The company operates a vertically integrated business model, giving it tight control over its supply chain from production to distribution. FDP is focused on enhancing profitability through supply chain optimization, innovation in higher-margin products like fresh-cut produce and strategic growth in emerging markets. Its avocado business has been a key area of growth, supported by infrastructure investments and acquisitions aimed at expanding its global sourcing and processing capabilities.

AVO’s Price Performance, Valuation & Estimates

Shares of Mission Produce have gained 15.1% in the last three months compared with the industry’s growth of 14.2%.

From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 23.97X, significantly above the industry’s average of 15.36X.

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 seven 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.

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

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