Bunge Limited (BG) sees a strong second half of the year as the agriculture sector rebounds with the fall harvest. Bunge recently reaffirmed its full year earnings guidance. BG trades with a forward P/E of 13.6.
Company Description
Bunge is an agribusiness and food company with operations in over 30 countries.
The company, founded in 1818 and headquartered in New York, manufactures fertilizers, originates oilseeds and grains, crushes oilseeds to make food for the livestock industry, produces bottled oils, mayonnaise, margarines and other food products, and mills wheat and corn for food processors, bakeries and other commercial customers.
Bunge has large operations in Brazil and Argentina as it operates 40 fertilizer facilities, including mines and blending plants, in the two countries.
Bunge Beat by 213.24% in the Second Quarter
On July 23, Bunge reported second-quarter results that surprised on the Zacks Consensus Estimate by $1.45 per share. Earnings per share were $2.13 compared to the Zacks Consensus Estimate of 68 cents.
Sales fell 23% to $10.994 billion from $14.365 billion in the year ago quarter. There was weakness across all segments compared to a year ago, with the largest segment, Agribusiness, declining 27% year over year. However, compared to the prior three quarters, the agribusiness segment saw improvement.
The Edible Oil Products segment also saw improvement due to better results in Europe and North America that more than offset lower volumes and margins in Brazil.
Bunge is expecting a solid second half of the year.
“Lower soybean production in South America has limited oilseed processing utilization in Argentina,” said Alberto Weisser, Chairman and Chief Executive Officer.
“While challenging locally, this should continue to support crush margins on a global level. A large North American harvest, which according to early indicators is likely, should provide us with ample volumes for our agribusiness operations in that region.”
The fertilizer segment remains challenging because of remaining high cost raw material inventory but the company is expecting good demand and improved phosphate pricing to boost the bottom line.
Reaffirmed 2009 Guidance
Because of the anticipation of a strong second half, the company maintained its prior guidance of $4.90 to $5.40 per share.
Mixed Movement for Zacks Consensus Estimates
Give the company’s beat on the second quarter and its outlook for the remainder of the year, the 2009 Zacks Consensus Estimate jumped 15% to $5.15 from $4.48 in the last month with 3 out of 5 covering analysts raising.
Analysts aren’t so bullish on the third quarter, however, as the Zacks Consensus Estimate fell 70 cents to $1.83 in the last 30 days.
Value Fundamentals
Bunge is a Zacks #1 Rank (strong buy) stock. It has a price-to-book of 1.05. The company has a solid 5-year return on equity of 13.01%. Additionally, the company pays a dividend with a current yield of 1.20%.
