AVO Bets on Direct-to-Retail in Europe: Too Soon or Just Right?

Core Insights - Mission Produce, Inc. (AVO) is expanding into Europe, aiming to replicate its U.S. success through direct-to-retail partnerships in a developing avocado market [1][3] - European sales for AVO increased by 37% year over year in Q3 fiscal 2025, indicating successful retailer penetration and utilization [1][8] - The company is leveraging its vertically integrated supply chain from Peru and Mexico to ensure consistent quality and supply for European retailers [2][8] Company Strategy - AVO focuses on direct-to-retail relationships with major grocery chains to enhance stability in quality, pricing, and supply [2] - By concentrating on a select number of top customers, AVO aims to maximize scale efficiency and profitability for retailers [2] - The strategy reduces reliance on intermediaries, allowing AVO to capture more margin and strengthen its value proposition [2] Market Position and Competition - AVO is entering a competitive landscape, facing significant competition from Calavo Growers, Inc. (CVGW) and Fresh Del Monte Produce Inc. (FDP) [4] - CVGW has established strong grower relationships and a diversified product range, while FDP benefits from a broad portfolio and extensive distribution capabilities [5][6] Financial Performance - AVO's shares have increased by 2% over the last three months, contrasting with a 1.4% decline in the industry [7] - The company trades at a forward price-to-earnings ratio of 25.46X, significantly higher than the industry average of 14.68X [9] - Zacks Consensus Estimate indicates a year-over-year earnings decline of 9.4% for fiscal 2025 and 28.3% for fiscal 2026, although estimates have improved recently [10]