October 7, 2022

StrategisChhr

Skillful Business Crafters

Earnings Miss: Mission Produce, Inc. Missed EPS By 11{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} And Analysts Are Revising Their Forecasts

The analysts might have been a bit too bullish on Mission Produce, Inc. (NASDAQ:AVO), given that the company fell short of expectations when it released its yearly results last week. It wasn’t a great result overall – while revenue fell marginally short of analyst estimates at US$892m, statutory earnings missed forecasts by 11{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b}, coming in at just US$0.63 per share. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.

NasdaqGS:AVO Earnings and Revenue Growth December 24th 2021

Taking into account the latest results, the consensus forecast from Mission Produce’s five analysts is for revenues of US$1.04b in 2022, which would reflect a solid 17{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 43{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} to US$0.91. In the lead-up to this report, the analysts had been modelling revenues of US$1.03b and earnings per share (EPS) of US$0.93 in 2022. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.

The average price target fell 8.8{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} to US$20.80, with reduced earnings forecasts clearly tied to a lower valuation estimate. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company’s valuation. There are some variant perceptions on Mission Produce, with the most bullish analyst valuing it at US$25.00 and the most bearish at US$20.00 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mission Produce’s past performance and to peers in the same industry. One thing stands out from these estimates, which is that Mission Produce is forecast to grow faster in the future than it has in the past, with revenues expected to display 17{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} annualised growth until the end of 2022. If achieved, this would be a much better result than the 0.8{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} annual decline over the past three years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 3.1{614c55998ee2f2593d42882a86444f5648ce8ae9e914fe55020881091372b47b} annually. Not only are Mission Produce’s revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Mission Produce. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Mission Produce’s future valuation.

With that in mind, we wouldn’t be too quick to come to a conclusion on Mission Produce. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Mission Produce going out to 2023, and you can see them free on our platform here..

Even so, be aware that Mission Produce is showing 2 warning signs in our investment analysis , you should know about…

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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