Calavo Growers: Strong Avocado Pricing Likely To Benefit Q4 2024 Earnings But Long-Term Concerns

2025-01-13 10:43:27 ET

Summary

• Calavo Growers has seen revenue growth due to high avocado prices but remains unprofitable with declining volumes and fierce competition.
• The company has a turnaround plan, focusing on core avocado and guacamole businesses, but results are yet to be seen.
• Despite reducing debt and boosting dividends, Calavo's financials are still weak, with negative GAAP net income and cash burn.
• I maintain a hold rating, awaiting more tangible results from the turnaround plan and Q4 earnings release.

Calavo Growers, Inc. ( CVGW ) is a centennial consumer staples company, generating most of its revenue from avocados. In 2018, the stock price peaked at $107 and investors reaped generous dividends as the company reported consecutive annual profitability. The avocado market continues to boom, it is expected to grow at a CAGR of 9.8% until 2032 and pricing is expected to remain high in 2025 . High avocado pricing is likely to benefit the company in the release of its Q4 FY2024 Earnings results on January 14, 2025. Recently, the company doubled the dividend at a FWD yield of 3.43% and the management team appeared positive towards ending the year strong during the Q3 2024 Earnings release ....

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