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

Core Insights - Mission Produce, Inc. (AVO) is a leading player in the premium fresh produce market, particularly in avocados, while also expanding into other categories like mangos and blueberries [1][2] - The company is experiencing increased sales volume due to improved supply conditions, but this has led to price pressures that may impact profitability [2][4] Financial Performance - In Q3 fiscal 2025, total revenues increased by 10%, primarily due to a 10% rise in avocado volumes sold, although this was partially offset by a 5% decline in average selling prices [2][9] - The company anticipates a 15% increase in industry volumes in Q4 fiscal 2025, driven by strong Peruvian supply and a new Mexican crop, but expects prices to drop by 20-25% compared to the previous year [3][9] Market Dynamics - The blueberry harvest season in Peru is expected to ramp up, contributing to higher volumes from owned farms, which may counterbalance revenue growth due to lower average selling prices [4] - Mission Produce is focusing on operational efficiency, cost control, and diversification to mitigate the impact of declining prices on margins [4] Competitive Landscape - Key competitors include Corteva, Inc. (CTVA) and Adecoagro S.A. (AGRO), both of which are enhancing their market positions through innovation and operational agility [5][6][7] Valuation and Estimates - Mission Produce shares have declined by 20.6% year-to-date, contrasting with the industry’s growth of 1.5% [8] - The company trades at a forward price-to-earnings ratio of 28.09X, significantly higher than the industry average of 13.03X [10] - Earnings per share (EPS) estimates indicate a year-over-year decline of 9.5% for fiscal 2025 and 28.4% for fiscal 2026, with stable estimates over the past 30 days [11]