Calavo Growers, Inc. (NASDAQ:CVGW) Has Found A Path To Profitability

We feel now is a pretty good time to analyse Calavo Growers, Inc.'s (NASDAQ:CVGW) business as it appears the company may be on the cusp of a considerable accomplishment. Calavo Growers, Inc. markets and distributes avocados, prepared avocados, and other perishable foods to retail grocery and foodservice customers, club stores, mass merchandisers, food distributors, and wholesale customers worldwide. The US$391m market-cap company posted a loss in its most recent financial year of US$8.3m and a latest trailing-twelve-month loss of US$5.2m shrinking the gap between loss and breakeven. The most pressing concern for investors is Calavo Growers' path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Calavo Growers

According to the 3 industry analysts covering Calavo Growers, the consensus is that breakeven is near. They expect the company to post a final loss in 2023, before turning a profit of US$16m in 2024. The company is therefore projected to breakeven around 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 80% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

We're not going to go through company-specific developments for Calavo Growers given that this is a high-level summary, however, keep in mind that typically a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital prudently, with debt making up 22% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are key fundamentals of Calavo Growers which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Calavo Growers, take a look at Calavo Growers' company page on Simply Wall St. We've also compiled a list of pertinent aspects you should look at:

1. Valuation: What is Calavo Growers worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Calavo Growers is currently mispriced by the market.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Calavo Growers’s board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.