What Happened:
Shares of fresh produce company Calavo Growers (NASDAQ:CVGW) jumped 12.4% in the morning session after the company reported second-quarter earnings results. Revenue and adjusted EBITDA beat expectations, even if the magnitude of the beat was small. Keeping up with the positive theme, management's commentary was constructive: "Our third quarter results reflect continued momentum in our flagship avocado business...Despite temporary industry supply disruptions from Mexico during the quarter, we generated strong financial results due to our operational flexibility." Lastly, peer Mission Produce (AVO) also reported strong results on the same day, showing that the industry seems healthy.
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What is the market telling us:
Calavo’s shares are not very volatile than the market average and over the last year have had only 21 moves greater than 5%. Moves this big are very rare for Calavo and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The biggest move we wrote about over the last year was 8 months ago, when the stock dropped 7.2% after the company's decision to postpone the release of its Q4'2023 earnings. Preliminary results indicated a concerning 18% decrease in net sales at $972 million for the year ending October 31, 2023, compared to the same period in 2022. This implies Q4'2023 revenue will come in at $241.2 million, significantly below analysts' estimates of $271.7 million.
Calavo is down 10% since the beginning of the year, and at $26.66 per share it is trading 10.5% below its 52-week high of $29.79 from December 2023. Investors who bought $1,000 worth of Calavo’s shares 5 years ago would now be looking at an investment worth $285.45.
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