Sunday, June 30, 2019

Bimbo Has Been Outperforming As Margins Improve

It took longer than investors wanted, but the last couple of quarters have finally shown the margin improvement investors have been waiting for in Grupo Bimbo’s (OTCPK:BMBOY) U.S./Canadian operations. Unfortunately, top-line momentum has been fading in both Mexico and U.S./Canada, and management has acknowledged limited capacity for price increases.

I thought Bimbo was undervalued back in June of 2018, and I think the share price outperformance since then has been reasonable. I still think the shares are undervalued, particularly if management can get its Latin American and EAA operations on better footing, but the discount to fair value isn’t as large anymore and it’s hard for me to be as bullish on this stock relative to the underperforming Gruma (OTC:GMKKY).

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Bimbo Has Been Outperforming As Margins Improve

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