Shares of avocado agribusiness Calavo Growers (NASDAQ:CVGW) rose 9% Wednesday following the company’s fiscal third-quarter 2020 results, which were released after the markets closed on Tuesday.

In its quarterly scorecard, Calavo revealed a significant year-over-year revenue decline of nearly 25% to $270 million. In addition, the organization recorded a diluted per-share loss of $0.89 versus a profit in the prior-year quarter of $0.60. Given such a seemingly weak top- and bottom-line showing, let’s break down below why investors were so sanguine about Calavo’s prospects following the report.

A hand is seen reaching to harvest a ripe avocado from a tree.

Image source: Getty Images.

Strides in profitability

Calavo Growers’ largest business, the fresh segment, saw sales dip 22% versus the third quarter of 2019, to $162 million. This chiefly occurred because avocado selling prices declined industrywide, due to a strong harvest in California and rising imports from Peru and Mexico. Fortuitously, Calavo was able to partially offset this impact with a vigorous 18%

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