Cobram Olive Estates (ASX:CBO): Buy the dip or falling knife?

Cobram Olive Estates (ASX:CBO) is a $1.4bn company – an impressive feat for a company only specialising in olives. But the company is off all time highs after investors poured cold water on its 1H26 results. Is this a chance to buy the dip or is it a falling knife?

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Cobram Olive Estates 

The company originated as a modest farming venture in Victoria in 1998 when Paul Riordan and Rob McGavin established a small olive nursery at Lara, importing their first trees and planting the first grove at Boundary Bend the following year. The founders expanded steadily through the early 2000s, building commercial olive groves, establishing an olive mill, and consolidating their operations into an unlisted public company originally called Boundary Bend Limited.

Along the way, the founders acquired the Cobram Estate® brand in 2006 and later Red Island® in 2012, positioning the group as a premium producer of extra virgin olive oil. It diversified through export markets, built processing facilities in Australia and the United States, and by the late 2010s had become Australia’s largest olive farmer and an internationally recognised olive oil brand.

In May 2021, Cobram Estate Olives listed on the ASX as part of a strategy to raise capital for expansion, particularly in the United States, and to provide liquidity to early investors and management. Since listing, capital raisings—including a large institutional placement in 2025 raising around A$175 million—have funded additional freehold grove acquisitions in California and accelerated the company’s footprint in one of the world’s largest olive oil markets.

The secret sauce

In our view, it is Cobram’s business model. It has always been vertically integrated—controlling groves, milling, bottling, storage and marketing—which has given it scale and cost advantages over commodity suppliers and allowed it to preserve quality and command premium prices.

The company’s proprietary agronomic systems like Oliv.iQ® improve yield and oil extraction, while significant land holdings (tens of thousands of hectares across Australia and California) underpin growing production volumes and long-term supply security.

The consistent earnings expansion, international brand penetration and ability to undertake infrastructure investment has all flowed from that.

CBO’s revenues have increased at double-digit rates in recent years, reflecting higher packaged goods sales and maturity of groves, while margins have strengthened as the business captures more value through branded products rather than bulk sales.

Broader consumer trends toward higher-quality, health-oriented foods have also bolstered demand for premium extra virgin olive oil, particularly in the USA where Cobram sees long-term opportunity due to comparatively low per-capita consumption.

Mixed recent results

Cobram’s recent financial performance highlights this momentum but also the seasonal and cost variability in agricultural markets. For the full fiscal year to June 2025, the company reported record results: group olive oil sales revenue climbed to around A$237m and EBITDA surged to about A$116m (from approximately A$66.7m the prior year).

Its net profit after tax expanded sharply to around A$49.6m, and operating cash flow rose substantially, reflecting one of its strongest ever harvests and stronger branded sales both domestically and in the USA. The board increased dividends as well, underscoring confidence in cash generation.

However, interim results for the six months to 31 December 2025 showed a moderation in earnings. Revenue from ordinary activities declined modestly compared to the prior corresponding period, and the company recorded an operating EBITDA of about A$9.5m and a net loss after tax of A$11.9m.

The company’s results were weighed down by higher costs and weaker bulk sales, although packaged goods performance remained resilient and the balance sheet was strengthened in preparation for strategic moves such as the proposed California Olive Ranch acquisition.

Buy the dip or falling knife?

There is a case to be made both ways. If the long-term drivers (US market expansion, mature Australian groves, brand strength) remain intact, a temporary earnings hiccup or seasonal variation could be a short-term correction rather than a structural problem.

Historically, Cobram has shown resilience and growth after downturns due to its scale and brand recognition. Investors who focus on long-term fundamentals might see this as an entry point. After all, just about all ASX agricultural companies are cyclical and the long-term track record speaks for itself.

Of course, the volatility could be a reason not to buy it. Bulk sales weakness may indicate more systemic market softness or competition that could persist.

A measured approach could be to wait for signs of stabilisation in its full-year results (Due in August) or perhaps for interim trading updates. These could deliver good news like a rebound in interim earnings, updated guidance, or confirmation that US expansion and branded sales continue to perform.

Conclusion

Overall, Cobram Estate is well ahead of where it was a few years ago and it has been an impressive journey from a small regional grower to a globally recognised, ASX-listed agribusiness valued at over A$1.4bn.

But it is at a pivotal point where its most recent results were not what investors were expecting and it remains to be seen if it is a one-off or the start of a longer-term decline. In our view, it is too early to answer that question.