Calavo Growers (NASDAQ:CVGW), a leading fresh produce company, is scheduled to release its third-quarter earnings report after market close tomorrow. This preview outlines key expectations and recent performance indicators for the company.
Table Content:
Calavo exceeded revenue expectations in the previous quarter, reporting $179.6 million, a 0.6% beat. Despite a year-over-year decline of 30.9%, the company delivered a strong performance, surpassing analysts’ EPS and narrowly exceeding EBITDA estimates.
For Q3 2024, analysts predict a 32.9% year-over-year revenue decrease to $161.9 million, compared to flat revenue in the same period last year. Adjusted earnings per share are projected at $0.30. Analysts have largely maintained their estimates over the past month, suggesting a stable outlook for Calavo heading into the earnings announcement. However, it’s worth noting that Calavo has fallen short of Wall Street’s revenue projections six times in the past two years.
Peer Performance Offers Insights into Calavo’s Potential Q3 Results
Examining Calavo’s peers in the consumer staples sector provides context for potential Q3 results. Mission Produce (NASDAQ:AVO) reported a significant 37.4% year-over-year revenue increase, exceeding expectations by a substantial 63.5%. Conversely, Campbell’s (NYSE:CPB) reported a 10.1% revenue growth, slightly missing estimates by 1.1%. Following their earnings releases, Mission Produce’s stock surged 17.3%, while Campbell’s declined 6.1%. These contrasting outcomes underscore the varied performance within the sector.
Market Optimism and Calavo’s Valuation
While valuations for many growth stocks haven’t fully recovered to their early 2021 peaks, recent market optimism stems from a perceived “soft landing” scenario. This suggests that interest rate hikes effectively curbed inflation without triggering a recession. Recent rate cuts and political developments have further bolstered market sentiment. Despite this, the consumer staples sector has generally underperformed, with average share prices down 9% over the last month. Calavo has experienced a steeper decline of 10.5% during the same period. The company enters its earnings announcement with an average analyst price target of $34.67, significantly higher than its current share price of $23.75.
Conclusion: Calavo’s Q3 Earnings in Focus
Calavo’s Q3 earnings release will be a critical event for investors, providing insights into the company’s performance amidst a challenging market environment. While analysts anticipate a revenue decline, the company’s ability to meet or exceed earnings expectations will be closely scrutinized. The contrasting performance of its peers highlights the potential for both positive and negative surprises. Calavo’s stock performance leading up to the announcement and the disparity between its current share price and analyst price target further emphasize the significance of this upcoming report. The market’s reaction to Calavo’s Q3 results will likely depend on the company’s ability to demonstrate resilience and provide a positive outlook for future growth.
