Is Mission Produce's Vertical Model a Long-Term Margin Driver?

Mission Produce Inc’s AVO vertically integrated business model has proven to be a strategic asset that enhances operational flexibility, supply consistency and long-term margin potential. By owning and controlling key parts of its supply chain, from farming to ripening and distribution, the company can respond quickly to market dynamics, optimize facility utilization and deliver a consistent product to retail partners across global markets.

This end-to-end model was a major factor behind AVO’s strong second-quarter 2025 results, where revenues rose 28% year over year. The company’s ability to leverage a global sourcing network and shift volumes between regions like Mexico, Peru and California helped mitigate seasonal and geopolitical disruptions, highlighting the resilience of the model.

One of the clearest advantages of Mission Produce’s vertical integration is its impact on cost control and margin improvement in the past few years. While the company faced some temporary margin pressures in early 2025 due to limited Mexican fruit supply and short-term tariff costs, its international farming operations, including mango and blueberry production, delivered a significant EBITDA turnaround. 

Mission Produce’s vertical model positions it for sustainable growth and margin expansion as it scales its diversified offerings. The ongoing investment in its farming base, such as expanded acreage in blueberries and maturing mango orchards, will fuel higher production volumes without proportionate increases in cost. As consumer demand for healthy, fresh produce continues to rise globally, the company’s vertically integrated platform offers a long-term strategic advantage that not only stabilizes margins but also creates scalable opportunities across multiple produce categories.

AVO Faces Stiff Competition From CVGW & FDP

In the intensely competitive fresh produce industry, Mission Produce contends with formidable rivals like Calavo Growers, Inc. CVGW and Fresh Del Monte Produce Inc. FDP, both of which have established global footprints and diversified product portfolios.

Calavo, a long-standing player in the avocado sector, integrates sourcing, packing and distribution, offering a vertically coordinated structure similar to Mission Produce. However, Calavo has faced recent challenges related to operational efficiency and margin pressure, which are in contrast with AVO’s improving EBITDA performance and optimized facility utilization. Nonetheless, CVGW’s strategy emphasizes product quality, consistent supply and expansion of its value-added portfolio to drive growth.

Fresh Del Monte operates across a broad spectrum of fruits and vegetables, leveraging its global logistics network and brand recognition. While FDP’s scale gives it a competitive edge, it lacks the avocado-specific infrastructure and ripening capabilities that underpin Mission Produce’s strategic advantage.

AVO’s Price Performance, Valuation & Estimates

Shares of Mission Produce have gained 17.2% in the last three months compared with the industry’s growth of 13.1%.

From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 24.68X, significantly above the industry’s average of 15.18X.

The Zacks Consensus Estimate for AVO’s fiscal 2025 and 2026 earnings indicates 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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