Calavo Growers 2025 Q2 Earnings Misses Targets as Net Income Rises 13.8%

Calavo Growers (CVGW) reported its fiscal 2025 Q2 earnings on Jun 09th, 2025. Calavo Growers Inc. saw its Q2 earnings increase year-over-year but fell short of analyst expectations. The company reported a net income of $6.85 million, or $0.38 per share, missing the average estimate of $0.53 per share. Despite the revenue growth of 3.3%, totaling $190.546 million, the results were overshadowed by a decline in gross profit and lower volumes in key product categories. Calavo's guidance remains optimistic, with expectations of strong momentum in the Prepared segment for the second half of the year. The company continues to focus on pricing power and expanding customer reach, especially during the California avocado season, as it navigates market challenges.

Revenue

Calavo Growers reported a revenue increase of 3.3% in the second quarter of 2025, reaching $190.55 million, compared to $184.38 million in Q2 2024. The Fresh segment contributed significantly with sales of $174.66 million, showcasing a robust growth driven by higher avocado pricing despite a drop in volume. Conversely, the Prepared segment experienced a decline, generating $15.88 million in revenue, marking a downturn from the previous year. Despite the mixed performance across segments, the overall revenue growth highlights the company's efforts to leverage pricing strategies amid fluctuating market conditions.

Earnings/Net Income

Calavo Growers' earnings per share (EPS) increased by 11.8% to $0.38 in Q2 2025, up from $0.34 in the same period last year. This reflects a continued growth trajectory in earnings, supported by a 13.8% rise in net income, which reached $6.94 million compared to $6.10 million in Q2 2024. However, the reported EPS fell short of analyst expectations, suggesting challenges in meeting market predictions.

Post Earnings Price Action Review

The investment strategy of purchasing Calavo Growers stock following a revenue beat and holding for 30 days yielded disappointing results. The strategy recorded a -55.51% return compared to a benchmark return of 93.67%, resulting in an excess return of -149.18%. This indicates substantial underperformance, with a Sharpe ratio of -0.35, highlighting significant risk and volatility. The strategy witnessed a maximum drawdown of -73.56%, coupled with high volatility at 42.73%, suggesting that the approach carried considerable risk during this period. Investors experienced substantial losses, underscoring the challenges in timing the market and the unpredictability of post-earnings stock movements.

CEO Commentary

“Our second fiscal quarter performance reflects the strength of our commercial strategy and disciplined operational execution amid continued volatility in the avocado market. Revenue grew year-over-year, driven by strong pricing performance,” said Lee Cole, President and Chief Executive Officer of Calavo Growers, Inc. He noted that gross profit per avocado carton improved year-over-year, reflecting a disciplined pricing strategy and strong supply chain execution, although total gross profit declined due to lower volumes in both tomatoes and avocados. Cole highlighted that the most significant impact arose from the tomato business, stemming from adverse weather and oversupply affecting pricing and demand.

Guidance

Looking ahead, Calavo Growers anticipates strong momentum in its Prepared segment during the second half of the year, supported by volume growth from new customer acquisitions and expanded programs with existing accounts. The company expects continued strength from the California avocado season, maintaining pricing power while expanding customer reach.

Additional News

Calavo Growers has recently announced a $25 million stock repurchase program authorized by its Board of Directors, reflecting confidence in its long-term strategy and financial position. This program, set to run until March 18, 2027, emphasizes the company's commitment to enhancing shareholder value while maintaining flexibility for strategic growth and operational improvements. Additionally, the company declared a quarterly cash dividend of $0.20 per share, payable on July 30, 2025. Moreover, Calavo Growers' Board of Directors has elected Farha Aslam as its new Chair, bringing extensive experience in finance and agriculture sectors to the leadership team. These strategic moves underline Calavo's focus on strengthening its market position and delivering value to shareholders.