Is Mission Produce's International Farming Finally Bearing Fruit?

Mission Produce, Inc.’s AVO third-quarter fiscal 2025 results highlight the growing influence of its International Farming operations, signaling that the company’s long-term investments in global sourcing and vertical integration are paying off. Total revenues reached $357.7 million, up 10% year over year, driven primarily by a 10% increase in avocado volumes. This growth was underpinned by stronger Peruvian production backed by favorable weather and improved Mexican supply following prior-year disruptions.

Gross profit climbed 22% year over year to $45.1 million, reflecting the benefits of higher yields from Mission Produce’s own farms and disciplined pricing strategies, while adjusted net income rose to $18.2 million, or 26 cents per share, demonstrating solid profitability.

The operational success of International Farming was particularly evident in Mission Produce’s ability to optimize its sourcing mix across multiple countries, proactively program sales and enhance relationships with retail customers. Segment sales surged 79% year over year to $49 million, with adjusted EBITDA jumping 163% to $12.1 million, fueled by higher avocado production and expanded packing and cooling services for third-party growers. The company also leveraged its Peruvian supply to strengthen international markets, achieving a 37% increase in European sales and expanding its presence in Asia, showcasing the scalability of its vertically integrated model and its competitive advantage in ensuring consistent year-round supply.

Looking ahead, Mission Produce is strategically positioning itself for continued growth while managing costs and operational efficiency. Capital expenditures are being moderated to generate meaningful free cash flow, and debt levels remain low, providing flexibility for opportunistic investments. While tariffs on U.S. avocado and mango imports are expected to have a minimal impact, industry volumes are projected to rise 15% in the fiscal fourth quarter, albeit with lower pricing due to higher supply. With its robust International Farming infrastructure, operational sophistication and strategic global investments, Mission Produce appears well-positioned to continue translating its farming initiatives into consistent financial performance and market expansion.

AVO Faces Stiff Competition From CVGW & FDP

Calavo Growers, Inc. CVGW and Fresh Del Monte Produce Inc. FDP are two key competitors in the fresh produce industry, each leveraging distinct strategic advantages.

Calavo has built a strong reputation through its reliable supply chain, deep partnerships with Mexican growers, advanced packing operations and a robust distribution network. These capabilities allow CVGW to consistently deliver premium avocados to both retail and foodservice customers, even amid market fluctuations. Looking ahead, growth may increasingly rely on expanding its value-added product lines, strengthening its presence in international markets and enhancing consumer-facing brand initiatives to capture new opportunities beyond core operations.

Fresh Del Monte leverages a fully integrated global model that spans farming, packaging, shipping, ripening and international distribution, giving the company end-to-end control and global reach. This allows efficient sourcing and delivery of a wide range of fruits, including avocados, across multiple markets. While its scale, logistics expertise and cost efficiency remain key strengths, future growth will depend on expanding higher-margin categories, driving innovation across products and tapping cross-selling opportunities with retail partners worldwide.

AVO’s Price Performance, Valuation & Estimates

Shares of Mission Produce have gained 13.6% in the last three months compared with the industry’s growth of 4.9%.

From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 26.87X, significantly above the industry’s average of 15.08X.

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 #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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