Calavo Growers markets, and distributes avocados, prepared avocados, and other perishable foods to food distributors, produce wholesalers, supermarkets, convenience stores, and restaurants worldwide. The company was founded in 1924 and is based in Santa Paula, California.
CVGW Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for CVGW, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Calavo Growers Inc ranked in the 13th percentile in terms of potential gain offered. We should note, though, that the most conservative analysis suggests this stock will yield negative results -- and thus may be a potential short opportunity. The most interesting components of our discounted cash flow analysis for Calavo Growers Inc ended up being:
As a business, CVGW is generating more cash flow than merely 15.29% of positive cash flow stocks in the Consumer Defensive.
The business' balance sheet reveals debt to be 7% of the company's capital (with equity being the remaining amount). Approximately merely 19.82% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
Calavo Growers Inc's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at -22.28. This coverage rate is greater than that of merely 5.42% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
LND, IBA, JJSF, BF.B, and SAM can be thought of as valuation peers to CVGW, in the sense that they are in the Consumer Defensive sector and have a similar price forecast based on DCF valuation.
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The Value Investor on Seeking Alpha | October 3, 2020
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