Fresh produce company Calavo Growers (NASDAQ:CVGW) fell short of the market’s revenue expectations in Q4 CY2024, but sales rose 21% year on year to $154.4 million. Its non-GAAP profit of $0.33 per share was 13.8% above analysts’ consensus estimates.
Is now the time to buy Calavo? Find out by accessing our full research report, it’s free.
Calavo (CVGW) Q4 CY2024 Highlights:
- Revenue: $154.4 million vs analyst estimates of $161.6 million (21% year-on-year growth, 4.4% miss)
- Adjusted EPS: $0.33 vs analyst estimates of $0.29 (13.8% beat)
- Adjusted EBITDA: $9.29 million vs analyst estimates of $9.36 million (6% margin, 0.8% miss)
- Operating Margin: 3.3%, up from -0.7% in the same quarter last year
- Market Capitalization: $398.5 million
Management Commentary“Our first quarter results reflect the strongest Q1 adjusted net income performance we’ve delivered since 2019,” said Lee Cole, President and Chief Executive Officer of Calavo Growers.
Company Overview
A trailblazer in the avocado industry, Calavo Growers (NASDAQ:CVGW) is a pioneering California-based provider of high-quality avocados and other fresh food products.
Perishable Food
The perishable food industry is diverse, encompassing large-scale producers and distributors to specialty and artisanal brands. These companies sell produce, dairy products, meats, and baked goods and have become integral to serving modern American consumers who prioritize freshness, quality, and nutritional value. Investing in perishable food stocks presents both opportunities and challenges. While the perishable nature of products can introduce risks related to supply chain management and shelf life, it also creates a constant demand driven by the necessity for fresh food. Companies that can efficiently manage inventory, distribution, and quality control are well-positioned to thrive in this competitive market. Navigating the perishable food industry requires adherence to strict food safety standards, regulations, and labeling requirements.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years.
With $688.3 million in revenue over the past 12 months, Calavo is a small consumer staples company, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with retailers.
As you can see below, Calavo’s demand was weak over the last three years. Its sales fell by 14.7% annually, a tough starting point for our analysis.
This quarter, Calavo generated an excellent 21% year-on-year revenue growth rate, but its $154.4 million of revenue fell short of Wall Street’s high expectations.
We also like to judge companies based on their projected revenue growth, but not enough Wall Street analysts cover the company for it to have reliable consensus estimates.
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Cash Is King
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
Calavo broke even from a free cash flow perspective over the last two years, giving the company limited opportunities to return capital to shareholders.
Key Takeaways from Calavo’s Q4 Results
It was encouraging to see Calavo beat analysts’ EPS expectations this quarter. On the other hand, its revenue and EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter, but the stock traded up 1.1% to $22.04 immediately following the results.
Is Calavo an attractive investment opportunity right now? The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.