Baked Goods Giant Grupo Bimbo Can Still Rise, But Operations Have Yet To Turn

Writing positively about Mexican baked goods giant Grupo Bimbo (OTCPK:BMBOY) (BIMBOA.MX) back in February was a horrible call, as seen by the subsequent 25% decline in the ADRs. Even though a company/stock like Grupo Bimbo ought to be defensive in a nervous Mexican market, adverse currency moves, ongoing margin pressures, and ongoing questions about management's strategic focus have continued to weigh heavily on the shares.

The sharp drop in the share price does not match a corresponding deterioration of the business, but investor confidence is easy to lose and hard to regain, and this is not a well-liked management team. Given the challenges in owning Bimbo (the ADR is illiquid, and buying local shares may be more hassle than it's worth, at least for some investors), I can't really push a strong "buy the pullback" call here. I do believe the current share price undervalues the business, I believe there will be some signs of stability in the business in the coming quarters, and I think the market jitters in Mexico will calm down, but it's tough to trust this company.

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Baked Goods Giant Grupo Bimbo Can Still Rise, But Operations Have Yet To Turn