Mission Produce Falls Below 50 & 200-Day SMAs: Is It Still a Buy?

Mission Produce, Inc. AVO has witnessed a significant decline in the past three months, pushing the stock below industry thresholds and raising caution from a technical standpoint. AVO’s international farming segment struggled recently, facing climate risks, as seen with the El Niño-related supply constraints in Peru.While AVO gained from high avocado prices, 2025 normalization may squeeze margins and profits, challenging recent gains. Additionally, ongoing spending on Guatemala and blueberry expansion, alongside debt-reduction efforts, could restrict financial flexibility for shareholder returns or opportunities.Driven by these trends, the AVO stock is trading below its 50 and 200-day simple moving averages (SMA), indicating a bearish outlook and challenges in sustaining the recent performance levels.The SMA is an essential tool in technical analysis that helps investors evaluate price trends by smoothing short-term fluctuations. This approach provides a clearer perspective on a stock's long-term direction. This technical indicator, along with the expected margin squeeze, high capital spending and climate risks, reflect doubts about AVO’s financial health and prospects.Mission Produce Stock Trades Below 50 & 200-Day Moving Averages Image Source: Zacks Investment Research Shares of the Oxnard, CA-based company have lost 13.4% in the past three months, underperforming its industry peer’s collective decline of 4.3% and the broader Consumer Staples sector’s dip of 3.3%. The AVO stock compared unfavorably against the S&P 500 Index’s growth of 1.7% in the same period.Mission Produce’s performance is notably weaker than its competitors. The stock’s decline is wider than Archer Daniels’ ADM fall of 10.4% in the past three months. AVO’s performance also reflects a stark contrast with Corteva CTVA and Alico ALCO, which have rallied 9.2% and 18.6%, respectively.AVO’s Three-Month Stock Performance Image Source: Zacks Investment Research At the current share price of $11.74, Mission Produce reflects a 23% premium to its 52-week low mark of $9.54. Meanwhile, the stock price reflects a 23% discount from its 52-week high of $107.43.Is AVO’s Premium Valuation Justified?Mission Produce is currently trading at a forward 12-month P/E multiple of 34.24X, exceeding the industry average of 13.87X and the S&P 500’s average of 22.54X.Although the current valuation may seem expensive, the stock trades much below its five-year high of 58.58X, indicating upside potential. Despite the recent dip in the stock price, a premium valuation may suggest that investors have high expectations for AVO's future performance and growth potential. Image Source: Zacks Investment Research How is AVO Stock Positioned for the Long Term?Despite a recent share price dip, Mission Produce has sustained strong growth, posting a 15.7% increase in the past year. Key drivers include rising avocado demand, expansion in emerging markets, supply-chain efficiency and product innovation.AVO’s competitive edge lies in its global sourcing network and integrated operations, allowing it to meet demand while optimizing per-unit margins. This synergy enables the company to capitalize on favorable pricing trends, driving profitability in its Marketing and Distribution segment.The company’s ability to manage supply chains efficiently and seize market opportunities underscores its long-term growth potential. A focus on operational excellence, strategic expansion and disciplined capital allocation positions Mission Produce for continued success.With a track of strong financial performance, including steady revenue and EBITDA growth, AVO demonstrates resilience in shifting market conditions. Its commitment to enhancing shareholder value reinforces its leadership in the global avocado market.For fourth-quarter fiscal 2024, Mission Produce expects revenue to surpass $320 million (suggesting a rise from the $257.9 million reported in the year-ago quarter) and adjusted EBITDA to exceed $28 million (compared with $17.3 million). These gains are driven by robust per-unit margins in the Marketing and Distribution segment, reflecting the company’s focus on operational efficiency and long-term growth.What Do AVO's Estimates Suggest?Amid all the hustle, Mission Produce continues to reflect stable estimates. The Zacks Consensus Estimate for the company’s fiscal 2024 and 2025 EPS have been unchanged in the past 30 days. For fiscal 2024, the Zacks Consensus Estimate for AVO’s sales and EPS implies 14.5% and 43.2% year-over-year declines, respectively. For fiscal 2025, the Zacks Consensus Estimate for AVO’s sales and EPS implies 4.4% and 2.4% year-over-year growth, respectively.Find the latest EPS estimates and surprises on Zacks Earnings Calendar. Image Source: Zacks Investment Research Is the AVO Stock Still a Buy Option?While Mission Produce’s technical indicators and recent stock performance may appear concerning at first glance, we cannot ignore the company’s competitive edge in its global sourcing network and integrated operations. Its strong market position, rising avocado prices and effective operational execution bode well.For investors, AVO offers exposure to a growing market and the ability to deliver improved financial efficiency to drive long-term returns. Despite the pricey valuation, the Zacks Rank #1 (Strong Buy) company’s prospects and recent dip offer an attractive entry point for investors. You can see the complete list of today’s Zacks #1 Rank stocks here.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Archer Daniels Midland Company (ADM): Free Stock Analysis Report Alico, Inc. (ALCO): Free Stock Analysis Report Corteva, Inc. (CTVA): Free Stock Analysis Report Mission Produce, Inc. (AVO): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks