Fresh Del Monte Produce (FDP)

Fresh produce company Fresh Del Monte (NYSE:FDP) fell short of the markets revenue expectations in Q3 CY2025, with sales flat year on year at $1.02 billion. Its non-GAAP profit of $0.69 per share was 38% above analysts’ consensus estimates.

Company Overview

Translating to "of the mountain" in Spanish, Fresh Del Monte (NYSE:FDP) is a leader in providing high-quality, sustainably grown fresh fruits and vegetables.

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.

Competitors in the fresh produce category include Calavo Growers (NASDAQ:CVGW), Dole (NYSE:DOLE), and Mission Produce (NASDAQ:AVO) along with private companies Chiquita Brands International and Sunkist Growers.

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.

With $4.32 billion in revenue over the past 12 months, Fresh Del Monte Produce carries some recognizable products but is a mid-sized consumer staples company. Its size could bring disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale.

As you can see below, Fresh Del Monte Produce struggled to increase demand as its $4.32 billion of sales for the trailing 12 months was close to its revenue three years ago. This shows demand was soft, a poor baseline for our analysis.

This quarter, Fresh Del Monte Produce’s $1.02 billion of revenue was flat year on year, falling short of Wall Street’s estimates.

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.

Fresh Del Monte Produce has bad unit economics for a consumer staples company, signaling it operates in a competitive market and lacks pricing power because its products can be substituted. As you can see below, it averaged a 8.2% gross margin over the last two years. Said differently, for every $100 in revenue, a chunky $91.79 went towards paying for raw materials, production of goods, transportation, and distribution.

In Q3, Fresh Del Monte Produce produced a 7.8% gross profit margin, down 1.5 percentage points year on year. Zooming out, the company’s full-year margin has remained steady over the past 12 months, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Operating margin is an important measure of profitability accounting for key expenses such as marketing and advertising, IT systems, wages, and other administrative costs.

Fresh Del Monte Produce’s operating margin might fluctuated slightly over the last 12 months but has generally stayed the same, averaging 3% over the last two years. This profitability was paltry for a consumer staples business and caused by its suboptimal cost structureand low gross margin.

Analyzing the trend in its profitability, Fresh Del Monte Produce’s operating margin might fluctuated slightly but has generally stayed the same over the last year, which doesn’t help its cause.

In Q3, Fresh Del Monte Produce generated an operating margin profit margin of negative 2.1%, down 6.6 percentage points year on year. Since Fresh Del Monte Produce’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, and administrative overhead increased.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q3, Fresh Del Monte Produce reported adjusted EPS of $0.69, down from $0.77 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. We also like to analyze expected EPS growth based on Wall Street analysts’ consensus projections, but there is insufficient data.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Fresh Del Monte Produce has shown mediocre cash profitability over the last two years, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 3.6%, subpar for a consumer staples business.

Fresh Del Monte Produce’s free cash flow clocked in at $60.9 million in Q3, equivalent to a 6% margin. This result was good as its margin was 3 percentage points higher than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Fresh Del Monte Produce historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 5%, somewhat low compared to the best consumer staples companies that consistently pump out 20%+.

Fresh Del Monte Produce reported $97.2 million of cash and $178.3 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $249.9 million of EBITDA over the last 12 months, we view Fresh Del Monte Produce’s 0.3× net-debt-to-EBITDA ratio as safe. We also see its $7.7 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We were also glad Fresh Del Monte's EPS outperformed Wall Street’s estimates. On the other hand, its gross margin missed and its revenue fell short of Wall Street’s estimates. Overall, we think this quarter would have been better. The stock traded down 9.9% to $31 immediately following the results.

Updated: December 3, 2025 at 10:03 PM EST

Are you wondering whether to buy Fresh Del Monte Produce or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Fresh Del Monte Produce falls short of our quality standards. To begin with, its revenue has declined over the last three years, and analysts expect its demand to deteriorate over the next 12 months. And while its EPS growth over the last three years has been fantastic, the downside is its gross margins make it more challenging to reach positive operating profits compared to other consumer staples businesses. On top of that, its projected EPS for the next year is lacking.

Fresh Del Monte Produce’s P/E ratio based on the next 12 months is 13x. While this valuation is reasonable, we don’t see a big opportunity at the moment. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $46 on the company (compared to the current share price of $37.47).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.