- Mission Produce gets about 85% of revenue from avocados, and a price collapse is impacting sales.
- A supply glut from Mexico, not weak demand, drove the pricing headwinds, but a recovery in prices is now expected.
- Mission Produce absorbs price shocks better than headlines suggest, with fiscal Q1 gross margin expanding 190 basis points despite a 30% decline in prices.
- Seasonality turns in Mission’s favor in the second half, with a record Peruvian harvest and management issuing upbeat guidance.
- Insiders and institutions are buying, including directors, the company’s largest shareholder, and elite funds run by billionaires.
- At 11.9 times forward EV/EBITDA, AVO looks worth about $16.50 a share, roughly 29% above current levels.
- Interested in more stocks insiders are piling into before the rest of the market catches on? Check out Insider Monkey’s coverage of insider buying and hedge fund positioning.
Mission Produce (AVO) sources, grows and distributes avocados across North America, Europe, the UK and Asia. Avocados account for roughly 85% of revenue, and that is why the company had a tough fiscal first half: sales fell 20% as avocado prices collapsed. The stock is down about 16% from its April highs.
Falling avocado prices are hurting Mission Produce, and the problem traces back to Mexico. The country grew its largest crop in years. Mexico accounts for about 80% of total avocado imports to the US. Avocado exports to the US jumped 35% year over year in the first four months of the year. The country dominates US avocado supply during the winter and early spring, while the larger California and Peruvian harvests generally do not ramp up until spring.
Mission grows its own fruit in Peru and Guatemala, but in Mexico and California it buys from third-party growers, mostly daily at market prices, then packs and delivers it. Mission’s high exposure to Mexican supply impacted its results in recent quarters as prices fell.
In Q1 FY2026, the average avocado price fell 30% and revenue dropped 17%. In Q2, ended April, pricing fell another 36% and revenue declined 24%. Volumes were never the problem amid exploding avocado demand — they rose 14% in Q1 and 15% in Q2.
Potential Price Recovery Coming
Avocado prices are expected to recover amid weather factors in Mexico. Michoacán, which grows more than 70% of the country’s avocados, is running drought stress at roughly 125% of the intensity of the 2024 drought, according to commodity analytics firm Helios AI. A similar drought hit Michoacán in 2024, cutting both crop volume and fruit size, and avocado prices spiked the following year.
The US Department of Agriculture has flagged the risk too, warning in its March report that an El Niño in the second half of 2026 could bring drier conditions and heat spikes that shrink fruit sizes in Mexico.
Prices should also get support from the harvest calendar, which turns in Mission’s favor from here.
Avocado harvests in Mexico peak from December through March. Production in Peru increases from April through September, while California runs from spring into summer.
Mission’s Q1 and Q2 are when the Mexican glut showed up in the numbers. These are also the months when the market is extremely dependent on Mexico. Q3 covers May to July and Q4 August to October, which is when Peru and California take over.
The improvement is already underway. On the Q2 earnings call in June, CFO Bryan Giles said the Mexican harvest had begun winding down, pricing lifted through the quarter, California growers who had been delaying finally started harvesting, and Mission had been picking its own Peruvian fruit for several weeks. The company expects fiscal Q3 pricing to fall about 15% year over year, compared with declines of 30% for Q1 and 36% in Q2. The pressure is cutting in half.
Mission’s second half benefits from its own Peruvian harvest, which management expects to reach a record 120 million to 130 million pounds, up from 105 million last year, with most sales falling in fiscal Q4. Its own fruit carries higher margins and fixed farming costs are spread across more pounds. That’s why management expects adjusted EBITDA of $84 million to $88 million in the second half, implying roughly $56 million in Q4 versus about $42 million a year earlier.
Photo by AlphaTradeZone
How Mission Produce Absorbs Price Shocks
Mission Produce is absorbing the recent price shocks smartly, and the market may be ignoring it. The company buys most of its fruit from third-party growers daily at market rates, so when avocado prices fall, its own input cost falls with them.
Q1 showed why this strategy works. Pricing fell 30%, and gross margin still expanded 190 basis points. Adjusted EBITDA rose 5% and Marketing & Distribution segment adjusted EBITDA climbed 33%.
However, in April, Mission faced a mismatch between the Mexican fruit sizes available and what customers wanted. The company had to pay higher prices for high-demand sizes and offer discounts on less desirable fruit. That negatively impacted its margins.
CFO Giles said the April mismatch was temporary and that the supply alignment improved during late May into June.
Impact of The Calavo Acquisition
Mission Produce in May completed its $465 million acquisition of Calavo Growers, an avocado company that also sells tomatoes, papayas and prepared foods like guacamole. The market welcomed the deal announcement in January, and the stock jumped 22%. The optimism did not last. Shares peaked in April and then fell as avocado pricing collapsed.
So what does the deal actually solve?
Calavo eases one of the pressure points directly. During the Q2 earnings call, CEO John Pawlowski said the company had to use more third-party packing services because the market was flooded with Mexican supply and its own capacity there was stretched. That hurt profitability. Next season it should handle that volume in-house because Calavo brings two Mexican packhouses and takes Mission from two facilities in the country to four.
Calavo will also diversify Mission’s portfolio. Beyond avocados, it brings guacamole, salsas and dips, plus greenhouse tomatoes and Hawaiian papayas. Calavo’s prepared foods business revenue grew 12% year over year.
Pawlowski said during the Q2 call that the deal should lift Mission’s margins because prepared foods carry a significantly higher margin profile than fresh fruit, with more details coming in September.
Insider Signals Turning Bullish
Two signals I watch closely when assessing a stock’s long-term potential are insider buying and institutional positioning. Both have become more constructive for Mission Produce lately.
Board member Bruce Taylor bought about 286,410 shares at $11.27 on June 17 and another 100,000 at $11.28 a few days later, increasing his stake to roughly 6.8 million shares. Director Jay Pack added 40,000 shares at $12.10 on June 30. Both bought within weeks of the fiscal Q2 report that knocked the stock to its lows.
Globalharvest Holdings Venture, Mission’s largest shareholder, bought roughly 2.4 million shares across July 6, 7 and 9, paying about $32 million at prices between $12.73 and $13.41.
Hedge fund filings for Q1 showed 20 funds holding stakes, up from 18 sequentially, with the aggregate dollar value rising as well. Rubric Capital Management had the biggest stake in the company at the end of March with roughly 1.73 million shares, followed by Charles Slotnik’s Slotnik Capital, which had more than 3% of its portfolio in the company. Several billionaire-run funds loaded up on the stock. Dmitry Balyasny’s Balyasny Asset Management lifted its stake by 1,087%, Cliff Asness’s AQR Capital Management by 29% and Israel Englander’s Millennium Management by 7%. Renaissance Technologies raised its holding by 45%, Quantinno Capital by 438% and EntryPoint Capital by 193%.
Valuation
Mission Produce (NASDAQ:AVO) currently trades at about 11.9 times forward EV/EBITDA, about 12% below the stock’s own five-year average. Mission delivered adjusted EBITDA of $110.8 million in fiscal 2025. Calavo reported $40.8 million in the same period. Applying that 11.9 times multiple to $152 million in fiscal 2027 EBITDA, and subtracting $350 million in term loan debt outstanding after the acquisition and dividing by the 88.3 million shares outstanding gives a fair value of about $16.50 per share, roughly 29% upside over the next 12 months. The target assumes no multiple expansion and excludes the $25 million in Calavo synergies.
Risks
Even after Calavo’s acquisition, avocados would still account for about 85% of Mission Produce revenue. The acquisition may soften the commodity swings but does not end them.
Peru is the fix for a Mexican glut, but it also carries weather risk. The company believes El Niño should not hit fiscal 2026 after two years of investment in tree health, but flagged possible volume changes in both Peru and Mexico in fiscal 2027.
Customer concentration is also a risk. The top ten customers made up 67% of fiscal 2025 sales, one at 19% and another at 12%, with no long-term supply contracts.
Conclusion
The Mexican glut did real damage, but the cause was seasonal. Mission Produce showed that it can absorb a price collapse, and the Calavo packhouses and product diversification give it more room to handle the next one.
Q3 FY2026 results land in September, and a stronger second half sets the company up well heading into next year.
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