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
|Historical stock prices|
|Current Share Price||US$31.75|
|52 Week High||US$45.50|
|52 Week Low||US$28.76|
|1 Month Change||-24.48%|
|3 Month Change||-24.48%|
|1 Year Change||-18.13%|
|3 Year Change||-65.11%|
|5 Year Change||-56.66%|
|Change since IPO||429.17%|
Recent News & Updates
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.
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.
|CVGW||US Food||US Market|
Return vs Industry: CVGW underperformed the US Food industry which returned 0.2% over the past year.
Return vs Market: CVGW exceeded the US Market which returned -21.5% over the past year.
|CVGW Average Weekly Movement||6.2%|
|Food Industry Average Movement||5.4%|
|Market Average Movement||6.9%|
|10% most volatile stocks in US Market||15.6%|
|10% least volatile stocks in US Market||2.8%|
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
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
|CVGW fundamental statistics|
Is CVGW overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|CVGW income statement (TTM)|
|Cost of Revenue||US$1.16b|
Last Reported Earnings
Jul 31, 2022
Next Earnings Date
|Earnings per share (EPS)||-0.90|
|Net Profit Margin||-1.30%|
How did CVGW perform over the long term?See historical performance and comparison
3.6%Current Dividend Yield
Is CVGW undervalued compared to its fair value, analyst forecasts and its price relative to the market?
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
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.
|What is CVGW's n/a Ratio?|
Price to Sales Ratio vs Peers
How does CVGW's PS Ratio compare to its peers?
|CVGW PS Ratio vs Peers|
|Company||PS||Estimated Growth||Market Cap|
VITL Vital Farms
WEST Westrock Coffee Company
TTCF Tattooed Chef
JBSS John B. Sanfilippo & Son
CVGW Calavo Growers
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.
|Current PS Ratio||0.5x|
|Fair PS Ratio||0.5x|
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.
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How is Calavo Growers forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?
Future Growth Score3/6
Future Growth Score 3/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
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 (7.6% 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
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How has Calavo Growers performed over the past 5 years?
Past Performance Score0/6
Past Performance Score 0/6
Growing Profit Margin
Earnings vs Industry
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.
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How is Calavo Growers's financial position?
Financial Health Score6/6
Financial Health Score 6/6
Short Term Liabilities
Long Term Liabilities
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).
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What is Calavo Growers's current dividend yield, its reliability and sustainability?
Dividend Score 4/6
Cash Flow Coverage
Current Dividend Yield
Dividend Yield vs Market
|Calavo Growers Dividend Yield vs Market|
|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 (1.66%).
High Dividend: CVGW's dividend (3.62%) is low compared to the top 25% of dividend payers in the US market (4.7%).
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.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Brian Kocher (53 yo)
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...
Experienced Management: CVGW's management team is not considered experienced ( 0.6 years average tenure), which suggests a new team.
Experienced Board: CVGW's board of directors are seasoned and experienced ( 12 years average tenure).
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.
|Owner Type||Number of Shares||Ownership Percentage|
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
Calavo Growers, Inc.'s employee growth, exchange listings and data sources
- 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
- Calavo Growers, Inc.
- 1141-A Cummings Road
- Santa Paula
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|CVGW||NasdaqGS (Nasdaq Global Select)||Yes||Common Stock||US||USD||Mar 2002|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/09/30 00:00|
|End of Day Share Price||2022/09/30 00:00|
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.