company background image
CVGW

Calavo Growers NasdaqGS:CVGW Stock Report

Last Price

US$31.75

Market Cap

US$563.0m

7D

-3.6%

1Y

-18.1%

Updated

01 Oct, 2022

Data

Company Financials +
CVGW fundamental analysis
Snowflake Score
Valuation5/6
Future Growth3/6
Past Performance0/6
Financial Health6/6
Dividends4/6

CVGW Stock Overview

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.

Calavo Growers Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Calavo Growers
Historical stock prices
Current Share PriceUS$31.75
52 Week HighUS$45.50
52 Week LowUS$28.76
Beta0.50
1 Month Change-23.90%
3 Month Change-24.48%
1 Year Change-18.13%
3 Year Change-65.11%
5 Year Change-56.66%
Change since IPO429.17%

Recent News & Updates

Aug 31

Calavo Growers Q3 2022 Earnings Preview

Calavo Growers (NASDAQ:CVGW) is scheduled to announce Q3 earnings results on Thursday, September 1st, after market close. The consensus EPS Estimate is $0.34 (vs. -$0.17 last year) and the consensus Revenue Estimate is $335.88M (+17.9% Y/Y). Over the last 2 years, CVGW has beaten EPS estimates 38% of the time and has beaten revenue estimates 63% of the time. Over the last 3 months, EPS estimates have seen 0 upward revisions and 5 downward. Revenue estimates have seen 4 upward revisions and 1 downward.

Jul 06

Calavo Growers: Turnaround In Place

Calavo Growers is a leading distributor of avocados and other fruits in the US. The business suffered tremendously from COVID-19 supply chain disruptions, with the stock falling 70% from peak. New management has implemented a turnaround plan that is starting to gain traction. Calavo Growers, Inc. (CVGW) is an interesting consumer staple turnaround story. It capitalizes on strong ongoing consumer demand for avocados. With a new CEO and a turnaround strategy in place, there is a good chance Calavo can return to normalized profitability in the next few years. Investors have a rare opportunity to accumulate shares as the business was severely punished by temporary COVID-19 disruptions. Introduction to Calavo Calavo Growers was founded in 1924 as the California Avocado Growers' Exchange to market the nascent avocado crops from California. After almost 8 decades as a growers' cooperative, co-op members voted to take the company public in 2002. Today, Calavo is a leader in packaging and distributing avocados and other fresh fruits to grocery stores and restaurants. Through Renaissance Food Group, Calavo also processes and packages fresh cut fruit and vegetables. Figure 1 shows a revenue and gross margin breakdown for Calavo. Figure 1 - Calavo revenue breakdown (Calavo investor presentation) Avocado Is A Superfood With Fast Growth The avocado is widely considered a superfood as it is extremely nutrient dense; avocados contain over 20 vitamins, minerals, fiber, and phytonutrients. Consumer demand for avocados continue to increase as they become aware of avocados' nutritional value, yet it is still underpenetrated relative to other fruits such as bananas and apples (Figure 2). US consumption of avocados have grown at a 5% CAGR from 2015 to 2020, and is forecast to grow at a 4% CAGR from 2021 to 2025. Figure 2 - Consumer demand increasing for avocados (Calavo investor presentation) Another factor driving the continued growth of avocado consumption is demographics. I believe the consumption of avocados will continue to grow at a high rate beyond 2025, as it is a staple in Hispanic diets (think guacamole) and Hispanics are the fastest growing demographic in the US, growing 23% in the past decade versus 7% for the overall US population and contributing over 50% of the population growth in that time frame (Figure 3). Figure 3 - Hispanics is the fastest growing demographic (Pew Research) Calavo Stumbled During Covid As with any commodity business, I usually begin my analysis by looking at the gross profit and gross margin. Calavo's historical profits and margins are summarized in Figure 4. Figure 4 - Calavo gross profit and margin (Author created with data from roic.ai) Calavo has historically generated consistent gross margins of approximately 10%, as its core business is to provide packaging, marketing and distribution services to crop growers and passes through the avocado costs to consumers. However, from Figure 4, we can see Calavo's business stumbled hard during the COVID-19 pandemic, with gross margin falling to 8.5% in 2020 and 5.4% in 2021. How did COVID-19 impact Calavo? The former CEO explained it as: First, the strong supply of avocados from Mexico, California and Peru created an oversupply scenario in U.S. markets as demand was inhibited by the effects of the pandemic. Retail shopping habits changed as a result of the social restrictions. Our teams shifted product sets to capture new demand as the year progressed. The continued lockdown of the restaurant channel further diminished demand in the foodservice sector of the business. Margins in our Fresh segment were negatively impacted as the supply and demand imbalance weighed on pricing. - Quote from James Gibson, former CEO, in 2020 Annual Report Operating margins likewise fell hard, with operating profit dipping negative in 2021, only the second time this has happened in the past 20 years (Figure 5). Figure 5 - Calavo operating profit and margin (Author created with data from roic.ai) Calavo's business went through so much disruption and hardship that both the CFO and CEO left abruptly in June and September of 2021. Turnaround Plan In Place - Uno, Dos, Tres, Vamos? After an extensive search, Calavo named a new CEO, Brian Kocher, effective February 1, 2022. Mr. Kocher was formerly the CEO of Castellini Group of Companies, one of the largest distributors of fresh produce in the US. He has also held prior CFO and COO roles at Chiquita Brands, a leading distributor of bananas and other produce. Based on his resume, Mr. Kocher looks like an ideal candidate for the CEO role at Calavo. Along with a new CEO, Calavo also launched a restructuring and rebranding campaign called 'Project Uno' (Figure 6). The key initiatives of the turnaround plan is to fix the pricing of the fresh products while rationalizing and consolidating costs. Figure 6 - Highlights of Calavo's turnaround plan (Calavo investor presentation) The turnaround strategy, combined with receding COVID-19 lockdowns, have started to show up in the financial reports with the company showing consecutive quarterly improvements in gross and operating margins. Encouragingly, gross margins bottomed at 2.8% in Q3/21 and have recovered to 6.6% in the most recent quarter (Figure 7). Figure 7 - Calavo's turnaround taking hold (Calavo investor presentation) Valuation Is Attractive What are Calavo shares worth? Assuming the business can recover to 10% gross margins by the next fiscal year and can keep operating expenses in check, I believe it's possible Calavo can leverage the strong growth in consumer demand for avocados and return to, and/or exceed, peak profitability that was achieved in 2018/2019. Figure 8 summarizes a forecast model I have created, which assumes avocado volumes (modeled by COGS) return to 2019 levels and grows at 4% p.a., while gross margin doesn't recover until F2023. Core operating expenses are forecast to grow at 6% p.a. due to elevated rates of inflation, while depreciation and capex are set at 10% and 12% of net PP&E respectively. Figure 8 - summary forecast model (Author created with data from roic.ai) This simple forecast model generates a DCF value of $53 per share (Figure 9), a modest premium to the current price around $42. The key assumption is a WACC of 7.1% (8% cost of equity; 2% cost of bank debt), and a 3% terminal growth rate. Figure 9 - Simple DCF forecast model (Author created) I believe the assumptions in this model are not too aggressive. Varying the growth rates and WACC, I can derive values as high as $80 (Figure 10). For reference, Calavo has a 20, 10, and 5yr Revenue CAGR of 7.6%, 6.7%, and 2.4% respectively, inclusive of the COVID-19 impacted 2020 and 2021 figures. Not to mention the forecasted 4% growth rate in avocado consumption, as noted in Figure 2. Figure 10 - DCF sensitivity to WACC and growth rate (Author created) Another way to think about valuation is that prior to COVID-19, Calavo had been trading at a Price-to-Earnings ratio of between 32x to 58x (Figure 11). If Calavo can return to peak profitability of ~$2 a share, it is certainly possible that market valuations can re-rate the stock to above $60. Figure 11 - Calavo P/E ratio from 2017 to 20219 (tikr.com) Risk To The Calavo Turnaround Story One risk with the Calavo turnaround story is that as the former CEO mentioned, there was an oversupply of avocados in 2020. If this oversupply persists, that could depress avocado selling prices and negatively impact Calavo's gross margins.

Shareholder Returns

CVGWUS FoodUS Market
7D-3.6%-3.4%-2.5%
1Y-18.1%-1.5%-23.2%

Return vs Industry: CVGW underperformed the US Food industry which returned -1.5% over the past year.

Return vs Market: CVGW exceeded the US Market which returned -23.2% over the past year.

Price Volatility

Is CVGW's price volatile compared to industry and market?
CVGW volatility
CVGW Average Weekly Movement6.2%
Food Industry Average Movement5.4%
Market Average Movement6.9%
10% most volatile stocks in US Market15.6%
10% least volatile stocks in US Market2.8%

Stable Share Price: CVGW is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: CVGW's weekly volatility (6%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
19243,676Brian Kocherhttps://www.calavo.com

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. It operates in three segments: Fresh Products, Calavo Foods, and Renaissance Food Group (RFG). The Fresh products segment distributes avocados and other fresh produce products comprising tomatoes and papayas; and procures avocados grown in California, Mexico, Peru, and Colombia.

Calavo Growers Fundamentals Summary

How do Calavo Growers's earnings and revenue compare to its market cap?
CVGW fundamental statistics
Market CapUS$562.98m
Earnings (TTM)-US$15.89m
Revenue (TTM)US$1.22b

0.5x

P/S Ratio

-35.4x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
CVGW income statement (TTM)
RevenueUS$1.22b
Cost of RevenueUS$1.16b
Gross ProfitUS$63.19m
Other ExpensesUS$79.08m
Earnings-US$15.89m

Last Reported Earnings

Jul 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-0.90
Gross Margin5.18%
Net Profit Margin-1.30%
Debt/Equity Ratio11.3%

How did CVGW perform over the long term?

See historical performance and comparison

Dividends

3.6%

Current Dividend Yield

-128%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is CVGW undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Sales vs Peers

  • Price-To-Sales vs Industry

  • Price-To-Sales vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for CVGW?

Other financial metrics that can be useful for relative valuation.

CVGW key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.5x
Enterprise Value/EBITDA30.6x
PEG Ration/a

Price to Sales Ratio vs Peers

How does CVGW's PS Ratio compare to its peers?

CVGW PS Ratio vs Peers
The above table shows the PS ratio for CVGW vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average1.3x
VITL Vital Farms
1.6x18.5%US$486.9m
WEST Westrock Coffee Company
1x15.1%US$754.4m
TTCF Tattooed Chef
1.7x16.8%US$410.6m
JBSS John B. Sanfilippo & Son
0.9xn/aUS$872.9m
CVGW Calavo Growers
0.5x3.8%US$563.0m

Price-To-Sales vs Peers: CVGW is good value based on its Price-To-Sales Ratio (0.5x) compared to the peer average (1.3x).


Price to Earnings Ratio vs Industry

How does CVGW's PE Ratio compare vs other companies in the US Food Industry?

Price-To-Sales vs Industry: CVGW is good value based on its Price-To-Sales Ratio (0.5x) compared to the US Food industry average (1.1x)


Price to Sales Ratio vs Fair Ratio

What is CVGW's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

CVGW PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio0.5x
Fair PS Ratio0.5x

Price-To-Sales vs Fair Ratio: CVGW is good value based on its Price-To-Sales Ratio (0.5x) compared to the estimated Fair Price-To-Sales Ratio (0.5x).


Share Price vs Fair Value

What is the Fair Price of CVGW when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: CVGW ($31.75) is trading below our estimate of fair value ($66.22)

Significantly Below Fair Value: CVGW is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.


Discover undervalued companies

Future Growth

How is Calavo Growers forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

Future Growth Score

3/6

Future Growth Score 3/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


113.6%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CVGW is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.9%).

Earnings vs Market: CVGW is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: CVGW is expected to become profitable in the next 3 years.

Revenue vs Market: CVGW's revenue (3.8% per year) is forecast to grow slower than the US market (7.7% per year).

High Growth Revenue: CVGW's revenue (3.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if CVGW's Return on Equity is forecast to be high in 3 years time


Discover growth companies

Past Performance

How has Calavo Growers performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-56.6%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CVGW is currently unprofitable.

Growing Profit Margin: CVGW is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: CVGW is unprofitable, and losses have increased over the past 5 years at a rate of 56.6% per year.

Accelerating Growth: Unable to compare CVGW's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: CVGW is unprofitable, making it difficult to compare its past year earnings growth to the Food industry (0.3%).


Return on Equity

High ROE: CVGW has a negative Return on Equity (-7.15%), as it is currently unprofitable.


Discover strong past performing companies

Financial Health

How is Calavo Growers's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: CVGW's short term assets ($148.4M) exceed its short term liabilities ($118.5M).

Long Term Liabilities: CVGW's short term assets ($148.4M) exceed its long term liabilities ($86.2M).


Debt to Equity History and Analysis

Debt Level: CVGW's net debt to equity ratio (10.2%) is considered satisfactory.

Reducing Debt: CVGW's debt to equity ratio has reduced from 15.2% to 11.3% over the past 5 years.

Debt Coverage: CVGW's debt is well covered by operating cash flow (169.4%).

Interest Coverage: CVGW's interest payments on its debt are well covered by EBIT (6.4x coverage).


Balance Sheet


Discover healthy companies

Dividend

What is Calavo Growers's current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


3.62%

Current Dividend Yield

Dividend Yield vs Market

Calavo Growers Dividend Yield vs Market
How does Calavo Growers dividend yield compare to the market?
SegmentDividend Yield
Company (Calavo Growers)3.6%
Market Bottom 25% (US)1.7%
Market Top 25% (US)4.7%
Industry Average (Food)2.8%
Analyst forecast in 3 Years (Calavo Growers)n/a

Notable Dividend: CVGW's dividend (3.62%) is higher than the bottom 25% of dividend payers in the US market (1.67%).

High Dividend: CVGW's dividend (3.62%) is low compared to the top 25% of dividend payers in the US market (4.73%).


Stability and Growth of Payments

Stable Dividend: CVGW's dividends per share have been stable in the past 10 years.

Growing Dividend: CVGW's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: CVGW is paying a dividend but the company is unprofitable.


Cash Payout to Shareholders

Cash Flow Coverage: With its reasonable cash payout ratio (60.3%), CVGW's dividend payments are covered by cash flows.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

0.6yrs

Average management tenure


CEO

Brian Kocher (53 yo)

0.58yr

Tenure

Mr. Brian W. Kocher serves as President and Chief Executive Officer of Calavo Growers, Inc. since February 01, 2022 and served as its Interim Chief Financial Officer from May 19, 2022 to June 20, 2022. He...


Leadership Team

Experienced Management: CVGW's management team is not considered experienced ( 0.6 years average tenure), which suggests a new team.


Board Members

Experienced Board: CVGW's board of directors are seasoned and experienced ( 12 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

What is the ownership structure of CVGW?
Owner TypeNumber of SharesOwnership Percentage
Individual Insiders652,4483.7%
General Public3,312,73818.7%
Institutions13,766,47577.6%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Top 25 shareholders own 66.4% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
16.03%
BlackRock, Inc.
2,841,558$90.2m3.18%no data
7.94%
The Vanguard Group, Inc.
1,408,161$44.7m-2.56%no data
6.76%
Nuance Investments, LLC
1,197,978$38.0m7.65%0.72%
3.61%
State Street Global Advisors, Inc.
640,518$20.3m1.83%no data
3.5%
ClearBridge Investments, LLC
620,507$19.7m-0.01%0.02%
2.72%
Dimensional Fund Advisors LP
481,645$15.3m-1.84%no data
2.53%
Kennedy Capital Management, Inc.
448,954$14.3m8.79%0.42%
2.37%
Renaissance Technologies LLC
420,500$13.4m0.94%0.02%
2.13%
J. Leavens
378,064$12.0m0%no data
2.04%
Wellington Management Group LLP
362,045$11.5m73.78%no data
1.73%
Geode Capital Management, LLC
307,459$9.8m-1.81%no data
1.69%
Goldman Sachs Group, Investment Banking and Securities Investments
299,010$9.5m-11.51%0.01%
1.66%
Charles Schwab Investment Management, Inc.
293,736$9.3m17.06%no data
1.42%
Royce & Associates, LP
251,941$8.0m-0.16%0.08%
1.22%
ProShare Advisors LLC
216,914$6.9m-8.96%0.02%
1.19%
Invesco Ltd.
211,624$6.7m-0.18%no data
1.16%
Morgan Stanley, Investment Banking and Brokerage Investments
205,922$6.5m-1.45%no data
1.06%
Northern Trust Global Investments
188,225$6.0m-3.49%no data
1%
Citadel Advisors LLC
178,038$5.7m43.05%0.01%
0.86%
BNY Mellon Asset Management
152,864$4.9m-10.64%no data
0.86%
Victory Capital Management Inc.
152,371$4.8m0%0.01%
0.79%
GAMCO Investors, Inc.
139,750$4.4m-3.25%0.02%
0.77%
Teachers Insurance and Annuity Association-College Retirement Equities Fund
136,224$4.3m0.32%no data
0.73%
Norges Bank Investment Management
128,637$4.1m0%no data
0.63%
Principal Global Investors, LLC
111,011$3.5m-4.8%no data

Company Information

Calavo Growers, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Calavo Growers, Inc.
  • Ticker: CVGW
  • Exchange: NasdaqGS
  • Founded: 1924
  • Industry: Packaged Foods and Meats
  • Sector: Food, Beverage & Tobacco
  • Implied Market Cap: US$562.980m
  • Shares outstanding: 17.73m
  • Website: https://www.calavo.com

Number of Employees


Location

  • Calavo Growers, Inc.
  • 1141-A Cummings Road
  • Santa Paula
  • California
  • 93060
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CVGWNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDMar 2002

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/01 00:00
End of Day Share Price2022/09/30 00:00
Earnings2022/07/31
Annual Earnings2021/10/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.