Mission Produce Inc. Common Stock (AVO) fair value

ACCE thesis

Mission Produce sources, packs and ships avocados from farms in Peru and Mexico, sold under its own brand and to grocery chains in North America, Europe and Asia, with a smaller specialty fruit business. The structural case rests on its vertically integrated sourcing: owning orchards and packing houses in the southern hemisphere lets it sell year-round, which is hard for importers that buy on the spot market. Revenue grew 25.8%, but the business is thin-margined, with an 11.0% gross margin and a 2.0% operating margin, and a trailing P/E of 402.7 reflects depressed earnings rather than a growth premium, since the forward P/E is 13.8. The thesis turns on whether operating margin can recover from 2.0% as volumes scale and pricing normalizes, because that is the gap between a 13.8x forward multiple that looks reasonable and one that does not. With a score of 41/100 and no index membership, the name needs a deeper look at margin trajectory and fruit pricing before it earns a place in a concentrated book.