Can Mission Produce Outperform Amid Soft Produce Demand?

Mission Produce, Inc. AVO is navigating a complex produce environment marked by softer overall demand, yet its recent performance suggests resilience and strategic advantages that may enable it to outperform peers. In its fiscal third quarter, the company delivered record revenues of $357.7 million, up 10% year over year, driven by higher avocado volumes and disciplined pricing even amid global oversupply pressures. This underscores the strength of Mission Produce’s vertically integrated model, which leverages global sourcing and farming assets to deliver consistency regardless of shifting supply-demand dynamics.

A key driver of Mission Produce’s outperformance lies in its ability to flex across sourcing regions, particularly Peru and Mexico. With stronger Peruvian yields and normalized Mexican supply, the company optimized its sourcing mix to maintain both volume and margins. At the same time, AVO has leaned on international expansion, with European sales jumping 37% year over year and Asia opening new channels, showing its capacity to pivot supply toward high-growth markets. This diversified footprint not only provides insulation from U.S. pricing volatility but also positions the company to capture global consumption growth in avocados and emerging produce categories.

Looking ahead, challenges remain with lower pricing expected in the fourth quarter, down as much as 20-25% year over year as supply increases. However, Mission Produce’s investment in operational enhancements, packhouse upgrades in Mexico and diversification into mangoes and blueberries suggests it is well-positioned to balance margin pressure with volume gains. The company’s strong balance sheet and moderating capital spending also provide flexibility for growth and shareholder value creation. While soft produce demand is a real industry headwind, AVO’s global reach, vertical integration and category diversification could allow it to sustain momentum and outperform competitors in a crowded marketplace.

AVO Faces Stiff Competition From CVGW & FDP

Calavo Growers, Inc. CVGW and Fresh Del Monte Produce Inc. FDP are two prominent competitors in the fresh produce industry, each capitalizing on unique strategic strengths to maintain market presence and drive growth.

Calavo Growers has built its reputation as one of the leading avocado marketers in the United States, with additional strength in prepared foods and guacamole. The company leverages long-standing grower relationships, strong retail partnerships and a vertically integrated supply chain to maintain steady product flow and service reliability. Recently, Calavo Growers has focused on cost optimization, efficiency initiatives and portfolio streamlining to improve margins after a period of profitability pressure. Its balanced presence in both fresh avocados and value-added products provides resilience, while ongoing innovation in consumer-packaged guacamole positions it to benefit from rising demand for convenient, ready-to-eat produce.

Fresh Del Monte is a diversified global produce powerhouse with leadership in bananas, pineapples, avocados and value-added fresh-cut products. Unlike many niche players, its scale and worldwide distribution network enable it to serve both retail and foodservice customers across North America, Europe, the Middle East and Asia. The company has increasingly emphasized product innovation, sustainability and cost efficiencies, introducing new packaging formats, expanding fresh-cut offerings and investing in technology-driven farming practices. With its broad product mix and global reach, Fresh Del Monte is positioned to capture growth in emerging markets while maintaining stability in its core categories.

AVO’s Price Performance, Valuation & Estimates

Shares of Mission Produce have gained 27.7% in the last six months compared with the industry’s growth of 12%.

From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 25.07X, significantly above the industry’s average of 14.67X.

The Zacks Consensus Estimate for AVO’s fiscal 2025 and 2026 earnings suggests a year-over-year decline of 9.5% and 28.4%, respectively. The estimates for fiscal 2025 and 2026 have moved northwards in the past 30 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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