Lavoro Limited (LVRO) AI Stock Analysis

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Lavoro Limited

(NASDAQ:LVRO)

Rating:46Neutral

Price Target:―

Lavoro Limited's overall stock score is primarily influenced by its financial performance, marked by strong revenue growth but challenged by profitability and leverage issues. The technical analysis shows a bearish trend, further pressuring the stock. Valuation concerns persist with a negative P/E ratio and no dividend yield. The earnings call offers a neutral outlook, with mixed results and no significant corporate events impacting the score.

Positive Factors

Crop Care Segment Growth

Growth in the higher margin Crop Care segment was the most positive metric, with revenues increasing 48% y/y in Q1/25.

Farmer Sentiment and Profitability

Management emphasized that farmer sentiment and anticipated harvest profitability for FY25 is more favorable relative to previous quarters.

Negative Factors

Financial Performance

The company additionally reported a ($76.2M) adjusted net loss for the period, widening over 400% y/y, primarily driven by income tax headwinds and higher financing costs.

Inventory Shortages

Severe inventory shortages in key crop categories, specifically soybean, in Brazil during critical planting months have affected the company's outlook.

Revenue Guidance Reduction

Management reduced its FY25 guidance to project midpoint revenues of $1.2B, approximately 23% below previous guidance.

Lavoro Limited (LVRO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$280.77M

Dividend YieldN/A

Average Volume (3M)5.64K

Price to Earnings (P/E)―

Beta (1Y)0.86

Revenue GrowthN/A

EPS GrowthN/A

CountryUS

Employees3,767

SectorBasic Materials

Sector Strength64

IndustryAgricultural Inputs

Share Statistics

EPS (TTM)-0.23

Shares Outstanding116,986,610

10 Day Avg. Volume3,852

30 Day Avg. Volume5,637

Financial Highlights & Ratios

PEG Ratio0.13

Price to Book (P/B)3.35

Price to Sales (P/S)0.00

P/FCF Ratio-39.82

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$3.25

Price Target Upside27.95% Upside

Rating ConsensusHold

Number of Analyst Covering2

Lavoro Limited Business Overview & Revenue Model

Company DescriptionLavoro Limited (LVRO) is a company operating within the agricultural sector, primarily providing a range of products and services that support agricultural production. Its core offerings include fertilizers, seeds, crop protection products, and other agricultural inputs that are essential for enhancing crop yields and farming efficiency.

How the Company Makes MoneyLavoro Limited generates revenue through the sale of agricultural inputs such as fertilizers, seeds, and crop protection chemicals to farmers and agricultural businesses. The company capitalizes on its extensive distribution network to reach a broad customer base, ensuring that its products are accessible to farmers in various regions. Additionally, Lavoro Limited may engage in strategic partnerships with agricultural technology firms to integrate advanced solutions into its product offerings, thereby enhancing its value proposition and potentially increasing sales. The company’s earnings are significantly influenced by factors such as agricultural demand, commodity prices, and seasonal trends that affect planting and harvesting cycles.

Lavoro Limited Financial Statement Overview

Summary

Lavoro Limited exhibits strong revenue growth but struggles with profitability and rising leverage. The company is improving its cash generation from operations, which is critical for future growth and debt management. However, strategic cost management and operational efficiency enhancements are needed to bolster financial stability.

Income Statement

Neutral

Lavoro Limited's revenue growth has been strong over the years, showing a consistent upward trajectory. However, the company has faced challenges in profitability, with negative net income in recent periods and declining gross profit margins, suggesting pressure on cost management or pricing strategy.

Balance Sheet

Neutral

The balance sheet indicates moderate leverage with a rising debt-to-equity ratio, which could pose financial risks if not managed carefully. Equity has decreased recently, impacting the equity ratio. However, the company maintains a reasonable level of assets and cash reserves relative to its liabilities.

Cash Flow

Neutral

Lavoro Limited's cash flow from operations has improved, although free cash flow growth remains constrained. The operating cash flow to net income ratio is positive, indicating some level of operational efficiency despite profitability issues. Consistent capital expenditures suggest ongoing investments in growth.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
9.08B	9.39B	9.35B	7.75B	5.10B	2.71B
	Gross Profit
1.37B	1.34B	1.73B	1.33B	735.89M	322.20M
	EBIT
53.19M	11.91M	226.87M	359.87M	132.00M	-61.66M
	EBITDA
387.04M	411.68M	594.52M	853.01M	165.21M	-68.12M
	Net Income Common Stockholders
-944.45M	-762.46M	-260.71M	78.17M	38.39M	-108.70M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
693.85M	911.34M	564.29M	254.41M	459.46M	158.50M
	Total Assets
10.61B	8.35B	7.52B	5.69B	4.40B	2.66B
	Total Debt
2.25B	1.85B	1.15B	865.80M	317.54M	201.35M
	Net Debt
1.56B	936.55M	585.60M	611.39M	-141.92M	42.86M
	Total Liabilities
8.54B	6.99B	5.41B	4.02B	2.93B	1.81B
	Stockholders Equity
1.78B	1.12B	1.86B	1.45B	1.35B	787.71M
Cash Flow		Free Cash Flow
-75.47M	51.33M	42.69M	-292.26M	18.88M	-45.27M
	Operating Cash Flow
20.48M	165.75M	108.07M	-244.56M	53.82M	-11.43M
	Investing Cash Flow
-218.57M	-318.27M	-220.73M	-293.95M	-393.36M	-280.43M
	Financing Cash Flow
145.53M	489.52M	448.73M	333.47M	640.50M	381.00M

Lavoro Limited Technical Analysis

Technical Analysis Sentiment

Negative

Last Price2.54

Price Trends

50DMA

2.97

Negative

100DMA

3.69

Negative

200DMA

4.16

Negative

Market Momentum

MACD

-0.15

Negative

RSI

43.63

Neutral

STOCH

37.90

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LVRO, the sentiment is Negative. The current price of 2.54 is below the 20-day moving average (MA) of 2.59, below the 50-day MA of 2.97, and below the 200-day MA of 4.16, indicating a bearish trend. The MACD of -0.15 indicates Negative momentum. The RSI at 43.63 is Neutral, neither overbought nor oversold. The STOCH value of 37.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for LVRO.

Lavoro Limited Risk Analysis

Lavoro Limited disclosed 86 risk factors in its most recent earnings report. Lavoro Limited reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Lavoro Limited Peers Comparison

Overall Rating

UnderperformOutperform

Sector (50)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FMC	64 Neutral	$4.77B	14.67	8.81%	6.10%	1.45%	-70.85%
IPI	64 Neutral	$482.47M	―	-35.32%	―	0.63%	-369.50%
BIOX	64 Neutral	$284.08M	193.48	0.51%	―	-13.98%	-403.35%
AVD	55 Neutral	$122.64M	―	-8.43%	2.82%	-2.35%	-782.69%
SMG	55 Neutral	$3.51B	121.47	4.98%	4.34%	0.75%	―
Sector *	50 Neutral	$1.99B	-1.06	-21.34%	3.71%	2.03%	-30.65%
LVRO	46 Neutral	$280.77M	―	-69.68%	―	―	―

* Basic Materials Sector Average

Performance Comparison

LVRO

Lavoro Limited

2.40

-3.41

-58.69%

AVD

American Vanguard

4.14

-4.69

-53.11%

FMC

38.22

-20.83

-35.28%

IPI

Intrepid Potash

36.63

9.00

32.57%

SMG

Scotts Miracle-Gro Company

59.42

-3.55

-5.64%

BIOX

Bioceres Crop Solutions

4.63

-6.32

-57.72%

Lavoro Limited Earnings Call Summary

Earnings Call Date:Feb 03, 2025

(Q1-2025)

% Change Since: -48.37%|

Next Earnings Date:May 29, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong growth in the Crop Care segment and ongoing cost-saving initiatives. However, the company faced significant challenges with revenue decline, increased net loss, and liquidity issues impacting inventory and operations. The balance of positive and negative aspects results in a neutral sentiment.

Q1-2025 Updates

Positive Updates

Crop Care Segment Growth

Crop Care demonstrated strength with double-digit year-over-year growth in revenue, gross profit, and adjusted EBITDA. Specifically, Crop Care saw a 68% revenue increase, led by Union Agro and Perterra.

Gross Profit and Margin Expansion

Despite lower revenue, gross profit increased 10% to BRL321.2 million with gross margin expanding 320 basis points to 15.6%.

Positive Farmer Sentiment and Market Conditions

Improvement in farmer profitability expectations for the '24/'25 crop year, with favorable weather conditions and stable agrochemical prices contributing positively.

Cost Savings Initiatives

Lavoro is implementing cost-saving measures such as retail network optimization and fixed cost reductions, expected to benefit the second half of the fiscal year.

Negative Updates

Revenue Decline

Consolidated revenue decreased by 13% year-over-year due to input price deflationary headwinds in Brazil Ag Retail and a 12% depreciation of the Brazilian real.

Net Loss Increase

Lavoro reported a net loss of BRL267.1 million, an increase of BRL196.1 million year-over-year, primarily due to deferred tax assets and higher finance costs.

Inventory and Liquidity Challenges

Significant liquidity constraints and inventory shortages affected Brazil retail operations, especially during the critical soybean crop window.

No Growth in Adjusted EBITDA Expected

The company no longer expects adjusted EBITDA to grow in fiscal year 2025 compared to the previous year.

Company Guidance

During Lavoro's fiscal 2025 first quarter earnings call, significant guidance metrics were shared. The company's consolidated revenue declined 13% year-over-year to BRL2.05 billion, primarily due to input price deflation in Brazil Ag Retail. Despite the revenue dip, gross profit rose 10% to BRL321.2 million, with a gross margin expansion of 320 basis points to 15.6%. The net loss increased to BRL267.1 million, attributed mainly to deferred tax assets and higher finance costs. Adjusted EBITDA decreased by 5% to BRL54.4 million. The outlook for fiscal year 2025 was adjusted, with expected consolidated net revenue ranging from BRL6.5 billion to BRL7.5 billion and the adjusted EBITDA no longer anticipated to grow compared to the previous year, reflecting the impact of supply chain constraints and challenging market conditions.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.