What Happened?
Shares of fresh produce company Calavo Growers (NASDAQ: CVGW) fell 17.3% in the afternoon session after the company reported weak first-quarter 2025 (fiscal Q2) results, which fell short of Wall Street's estimates across all key metrics, including sales, operating profit, and earnings per share.
Top-line growth benefited from higher average avocado prices, which offset a year-on-year decline in volume. The volume decline was attributed to constrained supply out of Mexico and USDA inspection delays.
Looking ahead, management expects volume growth to pick up, driven by new customer wins and expanded programs with existing accounts, as well as continued strength from the California avocado season. Overall, this quarter could have been better.
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What The Market Is Telling Us
Calavo’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. But moves this big are rare even for Calavo and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 12.4% on the news that the company reported strong second-quarter results. Revenue and adjusted EBITDA beat expectations, even if the magnitude of the beat was small.
Keeping up with the positive theme, management's commentary was constructive: "Our third quarter results reflect continued momentum in our flagship avocado business...Despite temporary industry supply disruptions from Mexico during the quarter, we generated strong financial results due to our operational flexibility."
Lastly, peer Mission Produce (AVO) also reported strong results on the same day, showing that the industry seemed healthy.
Calavo is down 8.6% since the beginning of the year, and at $23.30 per share, it is trading 21.4% below its 52-week high of $29.64 from September 2024. Investors who bought $1,000 worth of Calavo’s shares 5 years ago would now be looking at an investment worth $397.61.
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