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Calavo Growers, Inc. Just Missed Earnings With A Surprise Loss - Here Are Analysts Latest Forecasts

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·4 min read
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  • CVGW

It's been a sad week for Calavo Growers, Inc. (NASDAQ:CVGW), who've watched their investment drop 15% to US$53.01 in the week since the company reported its quarterly result. Revenues came in at US$273m, in line with estimates, while Calavo Growers reported a statutory loss of US$0.05 per share, well short of prior analyst forecasts for a profit. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Calavo Growers

NasdaqGS:CVGW Past and Future Earnings, March 12th 2020
NasdaqGS:CVGW Past and Future Earnings, March 12th 2020

Taking into account the latest results, the latest consensus from Calavo Growers's three analysts is for revenues of US$1.25b in 2020, which would reflect a satisfactory 3.5% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to soar 34% to US$2.40. Yet prior to the latest earnings, analysts had been forecasting revenues of US$1.25b and earnings per share (EPS) of US$3.05 in 2020. Analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a pretty serious reduction to EPS estimates.

It might be a surprise to learn that the consensus price target fell 26% to US$61.00, with analysts clearly linking lower forecast earnings to the performance of the stock price. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Calavo Growers analyst has a price target of US$73.00 per share, while the most pessimistic values it at US$53.00. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Zooming out to look at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up both against past performance, and against industry growth estimates. We would highlight that Calavo Growers's revenue growth is expected to slow, with forecast 3.5% increase next year well below the historical 8.2%p.a. growth over the last five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 2.6% next year. Even after the forecast slowdown in growth, it seems obvious that analysts still thinkCalavo Growers will grow faster than the wider market.

The Bottom Line

The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with analysts still expecting the business to grow faster than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Calavo Growers going out to 2022, and you can see them free on our platform here..

It might also be worth considering whether Calavo Growers's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.