Higher Volumes, Lower Prices: Can Mission Produce Balance the Equation?

Mission Produce, Inc. AVO has established itself as a global powerhouse in the premium fresh produce market, leveraging its leadership in avocados while accelerating growth across complementary categories like mangos and blueberries. The company is benefiting from higher sales volume owing to improved supply conditions, which has been exerting pressure on prices.

Mission Produce is scaling production and broadening its global footprint, mainly across its key markets. However, as supply continues to outpace demand, prices have come under pressure that may challenge profitability in the near term. In third-quarter fiscal 2025, total revenues grew 10% mainly driven by a 10% rise in avocado volumes sold, which was somewhat offset by a 5% drop in average per unit sales prices.

On its last earnings call, management had projected industry volumes to be roughly 15% higher year over year in the fourth quarter of fiscal 2025, driven by abundant Peruvian supply as the harvest season nears completion and the transition to a new Mexican crop, which is likely to exceed last year’s levels on positive weather conditions. However, it further noted that pricing is likely to be lower on a year-over-year basis by nearly 20-25% compared with the $1.90 per pound average seen in the year-earlier fourth quarter. Lower prices are directly correlated with expected higher volumes available in the U.S. and international markets. 

Mission Produce further cited that the blueberry harvest season in Peru will start ramping up in the final quarter. Again, significantly higher volumes from owned farms are expected, partly offsetting revenue growth by lower average selling prices. Higher volumes have been bolstering revenues and strengthening market share, but persistent price declines risk eroding margins in the near term. To balance this equation, AVO is emphasizing operational efficiency, disciplined cost control and diversification to help mitigate the effects of such reduced prices.

AVO’s Competition

Corteva, Inc. CTVA and Adecoagro S.A. AGRO are the key companies competing with Mission Produce.

Corteva has been reinforcing its position as a global agricultural leader by integrating advanced seed technologies with sustainable crop protection solutions. Through strategic cost discipline and continued innovation in next-generation seed traits and sustainable crop protection, CTVA is effectively offsetting pressures from rising input costs and weaker commodity markets. By combining robust R&D investment with strong operational efficiency, Corteva is positioning itself to meet the world’s growing need for sustainable and resilient food production systems.

Adecoagro stands as a major force in South America’s sustainable agribusiness and renewable energy arenas, underlining its solid positioning in the wider consumer goods industry. AGRO’s flexibility to adjust production between sugar and ethanol to address market dynamics further bolsters its operational agility. Investments in digital transformation, renewable energy generation and precision agriculture have bolstered efficiency and reduced costs. Hence, Adecoagro remains resilient despite the challenging global price landscape.

AVO’s Price Performance, Valuation and Estimates

Mission Produce shares have lost 20.6% year to date compared with the industry industry’s 1.5% growth.

From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 28.09X compared with the industry’s average of 13.03X.

The Zacks Consensus Estimate for AVO’s fiscal 2025 and fiscal 2026 earnings per share (EPS) indicates a year-over-year decline of 9.5% and 28.4%, respectively. The company’s EPS estimate for fiscal 2025 and fiscal 2026 has been stable in the past 30 days.
 

Mission Produce currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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

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