Zacks Industry Outlook Corteva, Dole, Adecoagro and Calavo Growers

Industry Overview - The Zacks Agriculture – Operations industry is expected to benefit from innovations and increasing consumer demand for healthy products, with positive agricultural export projections for fiscal 2024 supporting a favorable near-term outlook [1] - The industry includes companies involved in the production, transportation, storage, processing, and distribution of agricultural commodities, as well as those engaged in dairy operations and food ingredient development using gene-editing technology [3][4] Market Trends - Agricultural export projections for fiscal 2025 are estimated at $169.5 billion, a decline of $4 billion from fiscal 2024, primarily due to reduced unit values of soybeans, corn, and cotton, along with lower beef volumes [5][6] - The industry is experiencing a shift towards organic production techniques driven by growing consumer demand for healthier food, which is reducing the use of chemicals and pesticides [7][8] Challenges - Industry participants face significant challenges including fluctuating commodity prices, rising input costs, trade uncertainties, and increased operational expenses, all of which are impacting productivity and profitability [2][9] - Elevated costs due to inflation and supply chain challenges are squeezing profit margins, leading companies to implement pricing strategies and partnerships to mitigate these pressures [10][11] Performance Metrics - The Zacks Agriculture – Operations industry currently holds a Zacks Industry Rank of 86, placing it in the top 35% of over 250 Zacks industries, indicating bright near-term prospects [12][13] - Over the past year, the industry has underperformed the S&P 500 and the Zacks Consumer Staples sector, with a collective decline of 8.4% compared to a 5.8% increase for the sector and a 33.8% increase for the S&P 500 [15] Valuation - The agriculture – operations industry is trading at a forward 12-month price-to-earnings (P/E) ratio of 12.41X, significantly lower than the S&P 500's 22.7X and the sector's 17.33X [16] Company Highlights - Calavo Growers: A leader in the avocado industry, with a Zacks Rank 1 (Strong Buy). The company has seen a 14.1% stock rally in the past year, and its fiscal 2024 earnings estimate has increased by 13.9% [18][19] - Corteva: A pure-play agriculture company with a Zacks Rank 3 (Hold). The company has experienced a 23.4% stock increase over the past year, although its fiscal 2024 earnings estimate has decreased by 2.3% [20][21] - Dole: A global leader in fresh produce with a Zacks Rank 3 (Hold). The company has seen a 40.8% stock increase in the past year, with its fiscal 2024 sales estimate showing a growth of 0.5% [22][23] - Adecoagro: Engaged in various agricultural activities in South America, with a Zacks Rank 3 (Hold). The company’s shares have risen 10% in the past year, although its fiscal 2024 earnings estimate has decreased by 6.5% [24][26]