Mission Produce's Momentum Fades in August: Buy Now or Stay Cautious?

Mission Produce, Inc. AVO stock experienced a slowdown in August, following 15% growth in July. The AVO stock recorded a gain of 2.5% in August, underperforming the Zacks Agriculture – Operations industry and the Consumer Staples sector’s increases of 6.6% and 3%, respectively. However, the AVO stock marginally outperformed the S&P 500’s growth of 2.4% in the same period.

AVO’s performance is also notably weaker than that of its close competitors, Archer Daniels Midland Company ADM and Corteva Inc. CTVA, which posted growth of 15.6% and 3%, respectively, in August. However, the AVO stock has slightly surpassed Dole Plc DOLE, which rose 2.4% in August.

Mission Produce’s Price Performance

Currently at $12.65, the AVO stock trades 32.3% above its 52-week low of $9.56. The Mission Produce stock’s price also stands 17% below its 52-week high of $15.25, reflecting upside potential.

The stock trades above its 50-day and 200-day simple moving averages (SMA), indicating a bullish sentiment. SMA is an essential tool in technical analysis that helps investors evaluate price trends by smoothing out short-term fluctuations. This approach provides a clearer perspective on a stock's long-term direction.

AVO Stock Trades Above 50 & 200-Day Moving Averages

What’s Behind AVO’s Slowed Stock Performance

Mission Produce’s stock momentum has slowed despite record second-quarter fiscal 2025 revenues, reflecting concerns over profitability and near-term headwinds. The company benefited from elevated avocado pricing, but volumes were flat year over year due to persistent supply constraints in Mexico. This limited distribution growth and pressured margins, as higher prices were offset by lower per-unit profitability. Gross profit declined, weighed down by tariffs, costs from Canadian facility closures and challenges in sourcing fruit to meet customer demand.

At the same time, adjusted EBITDA declined, highlighting weaker performance in the Marketing & Distribution segment despite solid gains in mangoes and blueberries. Rising SG&A expenses, including legal costs and employee-related compensation, further pressured earnings. The cash flow was also negative, reflecting seasonal working capital needs and increased investments in farming assets. Looking ahead, management flagged expectations for lower avocado pricing due to a strong Peruvian harvest, which may temper revenue growth.

While Mission Produce’s global sourcing network, diversification into mangoes and blueberries, and strategic investments in Europe position it for long-term growth, investors remain cautious. Margin volatility, supply-chain risks, and elevated capital spending may continue to weigh on near-term sentiment, leaving limited visibility on a sustained rebound in the stock.

Mission Produce’s Estimate Revision Trend

The Zacks Consensus Estimate for AVO’s fiscal 2025 and 2026 EPS was unchanged in the last 30 days. For fiscal 2025, the Zacks Consensus Estimate for AVO’s sales implies year-over-year growth of 8.1%, while the estimate for EPS indicates a 20.3% fall. The consensus mark for fiscal 2026 sales and earnings suggests year-over-year declines of 8% and 20.3%, respectively.

AVO’s Premium Valuation

Mission Produce is currently trading at a forward 12-month P/E multiple of 30.8X, exceeding the industry average of 15.59X and the S&P 500’s average of 22.88X.

At 30.8X P/E, Mission Produce trades at a significant premium to its industry peers. The company’s peers, such as Archer Daniels, Corteva and Dole, are delivering growth and trade at more reasonable multiples. Archer Daniels, Corteva and Dole have forward 12-month P/E ratios of 13.8X, 21.64X and 11X — all significantly lower than that of AVO.

Although the current valuation may seem expensive, it suggests that investors have high expectations for AVO's future performance and growth potential. The company’s capability to execute its strategy and capitalize on a favorable pricing environment is essential for ensuring profitability and consistent performance in its Marketing and Distribution segment. While success in these areas can strengthen its market leadership, its failure can pose serious challenges for AVO.

Can AVO’s Solid Fundamentals Help Regain Momentum?

Mission Produce’s fundamentals suggest solid momentum ahead despite recent margin pressures. The company’s vertically integrated operations and extensive global sourcing network remain a significant competitive advantage, enabling it to navigate supply disruptions while fulfilling customer demand. Record fiscal second-quarter revenue growth highlights its strong market position, supported by higher avocado pricing and steady consumption trends. 

Mission Produce’s diversification into mangos and blueberries adds resilience, with mango operations gaining U.S. market share and blueberry volumes rising on expanded acreage. Management’s confidence is underscored by recent share repurchases, signaling belief in the company’s undervalued stock and long-term growth trajectory.

Looking ahead, a robust Peruvian avocado harvest and expanding international presence, particularly in the U.K., position the company for sustained top-line momentum. Investors are likely to draw confidence from Mission Produce’s ability to balance elevated costs with effective execution across segments, while capitalizing on strong demand and pricing tailwinds. Overall, Mission Produce’s fundamentals, supported by operational resilience and promising industry dynamics, point to a trajectory of continued growth and shareholder value creation.

Mission Produce: Strong Fundamentals, But Patience Required

AVO presents a mixed picture for investors. On the one hand, the stock has slowed recently, weighed down by muted estimate revisions, margin volatility, and a premium valuation that exceeds industry peers. Supply challenges, elevated costs, and expectations of lower avocado pricing in the near term may further pressure profitability, warranting a cautious stance in the short run.

On the other hand, AVO’s strong fundamentals provide a compelling long-term story. Its vertically integrated operations, global sourcing network, and diversification into mangoes and blueberries create resilience and a competitive edge. Strategic expansion into Europe and steady consumption trends highlight its growth runway, while share repurchases signal management’s confidence in unlocking shareholder value.

Ultimately, while near-term sentiment suggests a wait-and-watch approach, Mission Produce’s structural advantages and market position point to strong potential for long-term momentum once near-term headwinds stabilize. The company currently has a Zacks Rank #3 (Hold). 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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