As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the perishable food industry, including Flowers Foods (NYSE:FLO) and its peers.
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.
The 11 perishable food stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.4%.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Luckily, perishable food stocks have performed well with share prices up 12.8% on average since the latest earnings results.
Flowers Foods (NYSE:FLO)
With Wonder Bread as its premier brand, Flower Foods (NYSE:FLO) is a packaged foods company that focuses on bakery products such as breads, buns, and cakes.
Flowers Foods reported revenues of $1.22 billion, flat year on year. This print fell short of analysts’ expectations by 1.4%. Overall, it was a mixed quarter for the company with strong earnings guidance for the full year but a miss of analysts’ organic revenue growth estimates.
"We continued to execute well in the second quarter with a solid top- and bottom-line performance," said Ryals McMullian, chairman and CEO of Flowers Foods.
Flowers Foods delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 1.9% since reporting and currently trades at $23.09.
Read our full report on Flowers Foods here, it’s free.
Best Q2: Mission Produce (NASDAQ:AVO)
Founded in 1983 in California, Mission Produce (NASDAQ:AVO) grows, packages, and distributes avocados.
Mission Produce reported revenues of $324 million, up 23.9% year on year, outperforming analysts’ expectations by 40.3%. The business had an incredible quarter with an impressive beat of analysts’ earnings and gross margin estimates.
Mission Produce pulled off the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 20.6% since reporting. It currently trades at $12.90.
Is now the time to buy Mission Produce? Access our full analysis of the earnings results here, it’s free.
Slowest Q2: Cal-Maine (NASDAQ:CALM)
Known for brands such as Egg-Land’s Best and Land O’ Lakes, Cal-Maine (NASDAQ:CALM) produces, packages, and distributes eggs.
Cal-Maine reported revenues of $640.8 million, down 7% year on year, falling short of analysts’ expectations by 1.8%. It was a softer quarter as it posted a miss of analysts’ earnings and operating margin estimates.
Interestingly, the stock is up 12.6% since the results and currently trades at $73.
Read our full analysis of Cal-Maine’s results here.
Vital Farms (NASDAQ:VITL)
With an emphasis on ethically produced products, Vital Farms (NASDAQ:VITL) specializes in pasture-raised eggs and butter.
Vital Farms reported revenues of $147.4 million, up 38.5% year on year. This print surpassed analysts’ expectations by 6.5%. It was a stunning quarter as it also produced an impressive beat of analysts’ earnings estimates.
Vital Farms scored the fastest revenue growth among its peers. The stock is down 1% since reporting and currently trades at $34.40.
Read our full, actionable report on Vital Farms here, it’s free.
Calavo (NASDAQ:CVGW)
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.
Calavo reported revenues of $179.6 million, down 30.9% year on year. This number met analysts’ expectations. Taking a step back, it was a mixed quarter as it also logged an impressive beat of analysts’ earnings estimates but a miss of analysts’ gross margin estimates.
Calavo had the slowest revenue growth among its peers. The stock is up 18.8% since reporting and currently trades at $28.57.
Read our full, actionable report on Calavo here, it’s free.
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