Stock on the Run: Calavo Growers, Inc. (NASDAQ: CVGW)

On Wednesday, Shares of Calavo Growers, Inc. (NASDAQ: CVGW) showed the bullish trend with a higher momentum of 0.17% and ended its trading session at $99.90. The company traded total volume of 97,269 shares as contrast to its average volume of 141.17K shares. The company has a market value of $1.72B and about 17.45M shares outstanding.

Calavo Growers, Inc. (CVGW) recently stated that fiscal 2018 third quarter operating income rose 58 percent year-over-year on a 33 percent increase in gross profit. The company, a global avocado-industry leader and expanding provider of value-added fresh food, said that results for the most recent quarter increased net income and per-share results for the first nine months of this fiscal year to new all-time highs.

For the three months ended July 31, 2018, net income reached $12.40M, equal to $0.70 per diluted share. Excluding certain items impacting comparability, adjusted net income totaled $15.10M, or $0.86 per diluted share, which compares with $8.80M, or $0.50 per diluted share, in the corresponding quarter last year.

Revenues in the most-recent quarter totaled $296.40M, down a slight 2 percent from the company’s all-time quarterly record high of $301.60M in the fiscal 2017 third period. Gross profit advanced 33 percent to $33.10M, equal to 11.2 percent of revenues, from $24.90M, or 8.2 percent of revenues, in the corresponding quarter last year. The company’s operating income soared by 58 percent to register $19.20M as compared to $12.20M in the fiscal 2017 like quarter.

Net income for the nine months ended July 31, 2018 increased by $6.60M, or 24 percent, to reach a record $33.60M, or $1.91 per diluted share, from $27.00M, equal to $1.54 per diluted share, in the corresponding period one year ago. Adjusted net income for the first nine months of fiscal 2018 increased by 39 percent to $38.70M, or $2.20 per diluted share.

Revenues in the initial nine months this year rose to a record $808.80M, a boost from $798.40M for the like period in fiscal 2017. Gross profit rose by 10 percent, registering $91.30M, equal to 11.3 percent of revenues, which compares with $83.00M, or 10.4 percent of revenues, in the first nine months last year. Operating income climbed to $49.10M, a 19 percent increase from $41.10M last year.

Sales in the company’s Fresh business segment totaled $149.80M in the fiscal 2018 third quarter. This compares with Fresh segment sales of $168.90M in the third quarter one year ago. Segment gross profit equaled $14.90M, or 10.0 percent of segment sales, in the most-recent period as compared to $16.90M, or 10.0 percent of segment sales, in the fiscal 2017 third quarter. As stated in CEO Cole’s comments above, Fresh segment sales were influenced principally by lower industry-wide fresh avocado market prices as compared to one year ago and, more modestly, by lower industry-wide tomato market prices. Double-digit unit sales growth in all Fresh product categories—namely avocados and tomatoes—resulted in 20 percent increase in total volume to 4.90M units in the most-recent quarter from 4.10M in the like period of fiscal 2017.

In the RFG business segment, sales rose by 8 percent to $121.20M from $112.50M in the third quarter last year. RFG segment gross profit climbed $3.20M, or 46 percent, growing to $10.00M, equal to 8.2 percent of segment sales, from $6.80M, or 6.1 percent of segment sales, in the year-ago third period. The company stated that RFG’s year-over-year gross profit improvements are indicative of progress in attaining operating efficiencies and economies of scale at production facilities that opened and expanded last year, as well as continued development of new fresh food programs with retail customers.

The Calavo Foods business segment saw sales expand in the most-recent quarter to $25.30M, a 25 percent increase from $20.30M in the fiscal 2017 third period. Gross profit increased to $8.10M, or 32.1 percent of segment sales, from $1.10M, equal to 5.3 percent of sales, in the third quarter last year. The top-line improvement is underpinned mainly by a boost in volume of prepared avocado products sold in the third quarter. Gross profit and margin both benefited from higher sales, as well as fruit input costs that, while seasonally higher than in the second quarter, tracked below last year’s third-quarter record-high avocado input cost.

Calavo’s total selling, general and administrative (SG&A) expense in the most recent quarter was higher at $13.90M, or 4.7 percent of total revenues, from $12.70M, approximating 4.2 percent of total revenues, in the fiscal 2017 third period. The rise in SG&A expense owed mainly to higher year-over-year management incentive plan accruals.

Income (loss) from unconsolidated auxiliaries reduced $4.20M to a loss of $3.70M in the most-recent quarter. This mainly represents the recording of $3.50M in non-cash losses from FreshRealm, LLC. Certain details regarding FreshRealm, will be included in Calavo’s quarterly report on Form 10-Q soon to be filed with the U.S. Securities and Exchange Commission for the three months ended July 31, 2018.

The Company offered net profit margin of 4.00% while its gross profit margin was 11.30%. ROE was recorded as 16.80% while beta factor was 0.46. The stock, as of recent close, has shown the weekly upbeat performance of 0.77% which was maintained at 16.72% in this year.

Grover Beam

Grover Beam has over 14 years experience in the financial services industry giving him a vast understanding of how news affects the financial markets. He is an active day trader spending the majority of her time analyzing earnings reports and watching commodities and derivatives. He has a Masters Degree in Economics from Westminster University with previous roles counting Investment Banking.