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.
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%