Shares of Calavo Growers (NASDAQ: CVGW) were going rotten today after the avocado grower posted a decline in revenue and earnings in its fourth quarter.
As a result, the stock was down 7.7% as of 12:54 p.m. ET.
Image source: Getty Images.
Calavo shrivels
Calavo, one of the world's largest producers of avocados, said revenue in the quarter fell 1% to $241.2 million, which missed the consensus at $252.4 million.
In its grown segment, which is mostly avocados but also includes other produce like tomatoes, revenue rose 5.6% to $125.7 million. Avocado volume was down 8.7% as it focused on pricing, which helped drive gross profit up from $8.5 million to $8.7 million.
Its prepared segment struggled. Revenue was down 7.9% to $116.1 million, and gross profit in the segment fell from $11.8 million to $6.7 million. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell from $9.6 million to $7 million. However, it reported a loss per share of $0.33, which compared to a per-share profit of $0.03.
CEO Lee Cole said, "Avocado margins softened compared to the third quarter due to seasonality and an unfavorable foreign exchange impact of $3.0 million; however, margins improved versus the prior year quarter due to our margin management discipline."
What's next for Calavo
The company didn't offer guidance in the quarter, but the commentary from Cole should encourage investors. Cole, who was Calavo's longtime CEO and returned to the post last year, has driven a general recovery in the stock.
Calavo is also in the process of selling its fresh-cut business to F&S Fresh Foods, which should help it focus on the core grown segment.
While the quarterly results were disappointing, the recovery story still seems intact, especially with the avocado gross margin moving in the right direction.
Should you invest $1,000 in Calavo Growers right now?
Before you buy stock in Calavo Growers, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Calavo Growers wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.
*Stock Advisor returns as of January 29, 2024
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
