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Mission Produce, Inc. Just Missed EPS By 11%: Here's What Analysts Think Will Happen Next

Mission Produce, Inc. (NASDAQ:AVO) just released its latest annual report and things are not looking great. Mission Produce missed earnings this time around, with US$892m revenue coming in 3.1% below what the analysts had modelled. Statutory earnings per share (EPS) of US$0.63 also fell short of expectations by 11%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Mission Produce

earnings-and-revenue-growth
earnings-and-revenue-growth

Taking into account the latest results, the current consensus from Mission Produce's five analysts is for revenues of US$1.04b in 2022, which would reflect a solid 17% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 43% to US$0.91. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.03b and earnings per share (EPS) of US$0.93 in 2022. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.

The average price target fell 8.8% 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. Currently, the most bullish analyst values Mission Produce at US$25.00 per share, while the most bearish prices it at US$20.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. 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% annualised growth until the end of 2022. If achieved, this would be a much better result than the 0.8% 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% annually. So it looks like Mission Produce is expected to grow faster than its competitors, at least for a while.

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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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...

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

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