Village Farms vs. Mission Produce: Which Produce Stock Looks Better?

Core Insights - Village Farms International, Inc. (VFF) and Mission Produce, Inc. (AVO) operate in the fresh produce sector with different business models, where VFF focuses on greenhouse agriculture and higher-margin categories, while AVO specializes in avocados with a vertically integrated approach [1][2] Village Farms Overview - Village Farms emphasizes profitability, cost control, and efficient asset utilization to stabilize its results [2][20] - The company benefits from a controlled-environment growing model that ensures reliable production and consistent quality, regardless of external weather conditions, leading to steadier margins [4] - VFF's greenhouse operations provide flexibility in scaling production and shifting crop mix without significant capital expenditure, allowing for efficient capital use [5] - In addition to produce, Village Farms has developed a cannabis business, leveraging its growing expertise to focus on higher-quality products and international market expansion [6][7] - The company's strategy combines stability from its produce business with growth potential from cannabis, positioning it as a diversified agricultural platform [7] Mission Produce Overview - Mission Produce is the largest fully integrated avocado producer globally, achieving record sales of 691 million pounds of avocados in fiscal 2025, while expanding its market presence in Europe and Asia [8] - The company benefits from a high U.S. household penetration rate of nearly 70%, driving category growth through promotions and strong retailer partnerships [9] - AVO's competitive advantage lies in its integrated platform that covers sourcing, farming, ripening, and distribution, ensuring supply consistency and quality control [10] - The company is also expanding its portfolio to include blueberries and mangoes, targeting health-conscious consumers through digital investments and data-driven strategies [11] - Mission Produce's strong cash generation and balance sheet are highlighted by record adjusted EBITDA and over $180 million in operating cash flow, with low leverage [12] Financial Performance and Valuation - The Zacks Consensus Estimate indicates a year-over-year sales decline of about 27% for Village Farms, while EPS is expected to grow by 165.6% [13] - For Mission Produce, the current fiscal-year sales and EPS estimates show declines of 10.2% and 10.1%, respectively, but EPS estimates have increased by 47.9% to 71 cents [16] - Over the past year, Village Farms shares have increased by 381.9%, significantly outperforming Mission Produce's growth of 11.7% and the S&P 500's return of 17.6% [18] - Village Farms trades at a forward price-to-sales multiple of 1.55, above its historical median, while Mission Produce trades at 0.76, reflecting a more balanced risk-reward profile [18] Investment Outlook - Village Farms offers a mix of greenhouse produce and cannabis exposure, but its investment case relies on effective execution across its diverse businesses [20] - Mission Produce presents a more focused and predictable investment story, emphasizing scale and operational control, making it a more attractive option for investors seeking stability and reliable performance [20][21]