Why Mission Produce Stock Jumped Today

Actions of Mission Produce (AVO 19.04%) Shares of Mission Produce jumped Tuesday after the avocado, mango and blueberry company reported results for its fiscal 2024 third quarter. As of 1:30 p.m. ET, Mission Produce shares were up 19.3%.

High prices are good for Mission Produce

Fresh produce prices can fluctuate wildly, but prices worked in Mission Produce’s favor during its fiscal third quarter, which ended July 31. Its revenue during that period was primarily driven by its avocados, and sales volume for those products was down 10% from a year earlier, which isn’t ideal. But avocado prices rose 36%, contributing to a 24% increase in the company’s revenue, a bigger gain than expected.

Mission Produce management expects avocado prices to decline in the fourth quarter, although they will remain higher than in the fourth quarter of last year. This will help boost revenue. By switching from avocados to blueberries, sales volume should increase, but prices will be lower, meaning blueberries are unlikely to contribute to revenue growth.

Still, the rise in avocado prices has been enough to keep investors optimistic about Mission Produce.

And now ?

Mission Produce’s stock price may be slightly below 1x sales price, but I think it’s fairly well valued. This business can be unpredictable due to uncertainty about crop sizes and price impacts. But the company is doing well right now, having generated $37 million in operating income in the first three quarters of its fiscal year.

Mission Produce shareholders simply have to accept the volatility. Produce prices can fluctuate up or down due to factors beyond management’s control, which can impact the company’s results and stock price.