Price movement of Bunge Limited
Bunge Limited (BG) has a market cap of $7.3 billion. BG rose by 5.2% to close at $51.33 per share as of February 22, 2016. The price movement on a weekly, monthly, and year-to-date (or YTD) basis was -0.25%, -12.9%, and -24.2%, respectively.
Technically, the stock has broken the support and is trading below all moving day averages. Currently, BG is trading 8.7% below its 20-day moving average, 16.1% below its 50-day moving average, and 30.5% below its 200-day moving average.
The iShares S&P Global Energy ETF (IXC) invests 2.4% of its holdings in Bunge Limited. The ETF tracks a market-cap-weighted index of global energy companies. The YTD price movement of IXC was -3.6% as of February 19, 2016.
The AlphaClone Alternative Alpha ETF (ALFA) invests 1.1% of its holdings in Bunge Limited. The ETF tracks an index that aims to deliver outperformance by mimicking hedge funds’ positions in US equities. The index relies on lagged published holdings and can be long and short.
The market caps of Bunge’s competitors are as follows:
Workers’ positive expectations from new government
The leaders of Argentina’s grain workers’ unions expect a wage hike under the newly elected government, which could avoid the labor strikes that reduce the grain hub of Rosario. Export companies like Cargill, Bunge, and Louis Dreyfus have seen their shipments stalled as port and crushing plant workers’ demands for salary hikes in line with inflation, currently estimated at about 30%.
President Mauricio Macri was elected in November 2015 on an open markets platform and reduced the taxes on farm exports. Macri also lifted the trade and currency controls, which led to the weakening of the peso by about 36%.
The companies took the devaluation on a positive side because they pay costs in the local currency while being paid in US dollars.
Performance of Bunge in fiscal 4Q15 and fiscal 2015
Bunge Limited (BG) reported fiscal 4Q15 net sales of $11,133.0 million, a fall of 15.9% compared to net sales of $13,231.0 million in fiscal 4Q14. Its net income and EPS (earnings per share) rose to $188.0 million and $1.30, respectively, in fiscal 4Q15, compared to -$62.0 million and -$0.43, respectively, in fiscal 4Q14.
Fiscal 2015 results
In fiscal 2015, Bunge Limited reported net sales of $43,483.0 million, a fall of 23.9% YoY (year-over-year). Its net income and EPS rose to $738.0 million and $5.07, respectively, in fiscal 2015, compared to $467.0 million and $3.17, respectively, in fiscal 2014.
Meanwhile, its cash and cash equivalents rose by 13.5%, and its inventories fell by 20.1% in fiscal 2015. Its current ratio fell to 1.48x and debt-to-equity ratio rose to 1.7x in fiscal 2015, compared to a current ratio and a debt-to-equity ratio of 1.5x and 1.5x, respectively, in fiscal 2014.
The PE (price-to-earnings) and PBV (price-to-earnings) ratios of Bunge Limited are 11.1x and 1.2x, respectively, as of February 22, 2016.
Bunge Limited (BG) has made the following projections for fiscal 2016:
- In agribusiness, it expects results in oilseeds and grains to be largely driven by its South American operations.
- In food and ingredients, it expects higher results by ~$50 million of performance improvement-related benefits and from acquisitions.
- In fertilizer, the farmers’ economic conditions have improved in Argentina, as well as the removal of export taxes on grains, have resulted in a rise in sales.
- In sugar and bioenergy, it expects earnings and cash flow growth from hedge sugar and Brazilian ethanol.
- It expects depreciation, depletion, and amortization of ~$550 million.
- It expects capital expenditures of ~$850 million, which includes $150 million of investments carried over from 2015.
- It expects a tax rate in the range of 25%–29%.
In the next part, we’ll look at VF Corporation.