Why the Costa Group Share Price Tumbled by 17.15%

Shares of supermarket fruit and vegetable supplier Costa Group Holdings Ltd [ASX:CGC] have tumbled in value during today’s trading. Shares earlier today were down to $3.14 a piece, a significant drop of 17.15% from yesterday’s price.

Costa is Australia’s leading grower, packer and marketer of fruit and vegetables, and has a market cap of $1.21 billion.

So why the drop in share price?

Today’s drop in share price could be attributed to information that was released by the company this morning before market open. The information was an investor presentation containing Costa’s half year results.

Despite showing on track performance in many sectors including tomatoes, the presentation also showed some struggling sectors, including ‘short-term market and cost issues in mushrooms and raspberries’ and ‘unusual weather events’ impacting ‘CY19 Morocco earnings’.

The drop in share value could be a reflection of investor sentiment dropping following the release of the results. Despite the results not being overly pessimistic and showing plans to continue growth, investors may have panicked reading a few of the overview/headlining points and acted in this panic.

The presentation also showed growth plans in berry, citrus, avocado, international, tomato and mushroom markets, confirming the Costa team is ‘working intensely to mitigate the 2019 challenges’.

What’s next for Costa Group?

Costa’s share value could creep back up in the following days after the initial market panic simmers down.

The company has growth plans in motion for many of their products, including berry expansion plans in Australia, international berry expansion in China and Morocco and mushroom expansion in Monarto, South Australia.

It appears the company has faced challenges in 2019, but hopefully the above plans will assist them in mitigating further challenges.

So while the company says downside risk persists, today’s panicked selling could represent a buying opportunity.

Best wishes,

Ryan Clarkson-Ledward,
For Money Morning

PS: If you’re interested in five income payers to buy today, download this free report ‘Next Generation of Aussie Income Superstars (HINT: not banks)here.


Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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