How Is Mission Produce Managing Input & Freight Inflation?

Mission Produce, Inc. AVO is effectively navigating input and freight inflation through its vertically integrated sourcing and farming model. By owning and leasing thousands of acres of avocado farms in Peru, Colombia and Guatemala, the company reduces dependence on third-party growers and gains greater control over production costs and supply stability. This strategy also allows Mission Produce to better manage crop yields and quality while minimizing exposure to regional supply disruptions or sudden price spikes in raw materials.

To combat rising freight costs, Mission Produce has optimized its logistics and cold-chain infrastructure. The company operates a global network of ripening and distribution centers strategically located in North America, Europe and Asia. These facilities enable efficient routing, reduce reliance on expensive third-party freight carriers and preserve fruit freshness to limit spoilage-related losses. By managing key steps in the supply chain from harvesting to delivery, Mission Produce not only lowers costs but also maintains high service levels for its retail and foodservice customers.

Looking ahead, Mission Produce expects input and freight-related headwinds to ease as it transitions into avocado harvesting from its own farms in Peru and other regions. This shift is anticipated to relieve pressure on working capital and stabilize inventory costs. Despite short-term impacts from sourcing disruptions and elevated prices, management remains confident in the company's ability to generate sustainable long-term growth through its multi-origin sourcing, cost containment efforts and diversification into high-growth categories like blueberries and mangoes.

AVO’s Peer Comparison: CVGW & FDP

Some of AVO’s competitors in the same space are Calavo Growers, Inc. CVGW and Fresh Del Monte Produce Inc. FDP.

CVGW is managing input and freight inflation by streamlining its operations through automation, consolidating facilities to reduce overhead, and leveraging its vertically integrated sourcing model, especially in Mexico and California, to better control supply costs.

FDP, on the other hand, benefits from owning a significant portion of its farming and shipping infrastructure, allowing it to reduce reliance on third parties. FDP counters inflation by optimizing shipping routes, using its own vessels and diversifying sourcing across regions to mitigate cost spikes in any single location. The company focuses on cost efficiencies and strategic sourcing to preserve margins.

AVO’s Price Performance, Valuation & Estimates

Shares of Mission Produce have gained 15.4% in the past month compared with the industry’s growth of 3.8%.

Image Source: Zacks Investment Research

From a valuation standpoint, AVO trades at a forward price-to-earnings ratio of 25.63X, significantly above the industry’s average of 16.32X.

Image Source: Zacks Investment Research

The Zacks Consensus Estimate for AVO’s fiscal 2025 earnings implies a year-over-year decline of 32.4%, whereas its fiscal 2026 earnings estimate suggests a year-over-year decline of 6%. The estimates for fiscal 2025 and 2026 have been unchanged in the past 30 days.

Image Source: Zacks Investment Research

AVO stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."

Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.5% per year. So be sure to give these hand picked 7 your immediate attention. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research