Simple Concepts Research Group

Are Investors Overlooking Bunge Limited (NYSE: BG)?

by | Jun 24, 2022 | 52 Week Lows, Stock Picks

bunge limited bg stock valuation

Bunge Limited (BG) Company Overview & Stock Price Forecast

This article provides a brief analysis and stock rating for Bunge Limited (BG) including an updated stock price target. Additional data on the company’s earnings yield, price/earnings ratio, return on invested capital and YTD performance are discussed as well.

Bunge Limited Fundamentals

BG Stock Rating

Stock Price Target: $119.43

In the section below, we discuss the earnings yield, P/E, return on invested capital and YTD performance for Bunge Limited in comparison to the Agriculture industry and the S&P 500.

Bunge Limited is a Large Cap company with a Market Cap of $13.6B.

How are investors using Bunge Limited earnings yield to assess the company?

Bunge Limited (BG)_ Earnings Yield in Comparison to the Agriculture Industry, S&P 500 and 10 Year Treasury Rate

The earnings yield is used to show the percentage of a company’s earnings per share. Investors typically use earnings yield to determine which assets are underpriced or overpriced relative to other variables, like sector, industry or bond yields. Simply put, the earnings yield of a company can be used to assess how expensive a company is in relation to the earnings that are generated. When valuing companies, the SIS Research Group does not utilize the inverse P/E ratio to calculate the earnings yield. Instead, we use an adjusted earning yield calculation to capture variation amongst companies (i.e. debt and tax rates).

The current earnings yield for Bunge Limited is 21.51%, in comparison to 5.22% for the S&P 500 and 3.31% for the 10-year treasury bond. The median earnings yield for the Agriculture industry is 7.77%.

What does Bunge Limited Price-to-Earnings Ratio (P/E) tell investors about the company?

Bunge Limited (BG)_ Price-to-Earnings, Price-to-Sales and Price-to-Book Value in Comparison to the Agriculture Industry and the S&P 500

The price-to-earnings ratio (P/E) is a relatively popular metric used by investors and analysts for valuing a company’s stock. The P/E ratio can be used to show how a stock’s valuation compares to other companies and the total market. Investors use the P/E ratio to determine what the market is willing to pay today based on a company’s past or future earnings. A high P/E ratio could mean that a stock’s price is too high relative to earnings, which could be a signal that a stock is currently overvalued. In turn, a low P/E ratio could indicate that a company’s current stock price is low relative to earnings. 

Bunge Limited is currently trading at a P/E of 7.35. The P/E for the Agriculture industry is 14.74 and the P/E for the S&P 500 is 19.15.

What is the current Price-to-Sales Ratio (P/S) for Bunge Limited?

The Price-to-Sales Ratio (P/S) looks at a company’s market cap and revenue to determine valuation. The P/S ratio is calculated by taking a company’s market cap and dividing by the total sales or revenue. The P/S ratio gives an idea of how much the market values every dollar of a company’s sales and can be effective in valuing unprofitable growth stocks or companies that are currently undergoing special situations or challenges. A lower the P/S ratio can be an indicator of good value.

Bunge Limited is currently trading at a P/S of 0.23. The P/S for the Agriculture industry is 0.97 and the P/S for the S&P 500 is 2.42.

How does Bunge Limited Price-to-BookRatio (P/B) compare to the Agriculture industry?

Price-to-book value (P/B) is the ratio of the market value of a company’s shares divided by its book value of equity (the value of it’s assets on the books). The book value is the difference between the book value of assets and liabilities. Typically, investors use the P/B ratio to assess if a stock is valued properly (a value of one means that the stock price is trading in line with the book value of the company). A company with a high P/B ratio could mean the stock price is overvalued as well as the converse.

Bunge Limited P/B ratio is 1.88. The P/B for the Agriculture industry is 3.23 and the P/B for the S&P 500 is 3.76.

How attractive is Bunge Limited Return on Invested Capital (ROIC) to investors?

Bunge Limited (BG)_ Return on Invested Capital in Comparison to the Agriculture Industry and the S&P 500

Investors use the return on invested capital (ROIC) to assess how efficient a company is at turning capital into profits. The ROIC is the amount of money a company makes on it’s investments that is above the average cost of debt and equity.

Investors can use the ROIC to provide context for metrics like the (P/E) ratio. For instance, when used in isolation a low P/E ratio could suggest a company is oversold but the decline could be because a company is no longer generating value for shareholders. Conversely, companies that consistently generate high rates of ROIC can plausibly trade at a premium compared to other stocks, even if their P/E ratios are high.

Bunge Limited ROIC is currently 15.65% in comparison to 8.60% for the Agriculture industry and 9.10% for the S&P 500.

Bunge Limited (BG)_ Price Target & 52-Week Price Range

How has BG stock performed over the past year? What is the current analyst price target?

Over the past 52 weeks, Bunge Limited has traded between the range of $71.73 and $128.40.

The current Analyst Price Target for Bunge Limited is $119.43.

What is Bunge Limited YOY Performance in comparison to its industry and the total market?

The YOY performance for Bunge Limited is 9.25%. The Agriculture industry has a YTD performance of 4.15% in comparison to the YTD S&P 500 performance of -10.16%.

Bunge Limited (BG)_ YOY Performance in Comparison to the Agriculture Industry and the S&P 500

Recent Financial Results

  • Q1 GAAP EPS of $4.48 vs. $5.52 in the prior year; $4.26 vs. $3.13 on an adjusted basis excluding certain gains/charges and mark-to-market timing differences
  • Agribusiness continues to adapt to dynamic, rapidly changing market conditions while connecting farmers to global consumers
  • Refined and Specialty Oils benefiting from favorable demand trends, as well as supply chain and innovation capabilities
  • Increasing full-year adjusted EPS outlook to at least $11.50 based on stronger than expected Q1 results and current forward crush curvesRefined and Specialty Oils benefiting from favorable demand trends, as well as supply chain and innovation capabilities

Stock Price Target: $119.43

Company Overview

BG Stock Rating

Bunge Limited operates as an agribusiness and food company worldwide. It operates through four segments: Agribusiness, Refined and Specialty Oils, Milling, and Sugar and Bioenergy. The Agribusiness segment purchases, stores, transports, processes, and sells agricultural commodities and commodity products, including oilseeds primarily soybeans, rapeseed, canola, and sunflower seeds, as well as grains primarily wheat and corn; and processes oilseeds into vegetable oils and protein meals.

The Refined and Specialty Oils segment sells packaged and bulk oils and fats that include cooking oils, shortenings, margarines, mayonnaise, and other products for baked goods companies, snack food producers, confectioners, restaurant chains, foodservice operators, infant nutrition companies, and other food manufacturers, as well as grocery chains, wholesalers, distributors, and other retailers.

The Milling segment provides wheat flours and bakery mixes; corn milling products that comprise dry-milled corn meals and flours, wet-milled masa and flours, and flaking and brewer’s grits, as well as soy-fortified corn meal, corn-soy blends, and other products; whole grain and fiber ingredients; quinoas and millets; die-cut pellets; and non-GMO products.

The Sugar and Bioenergy segment produces sugar and ethanol; and generates electricity from burning sugarcane bagasse. Bunge Limited was founded in 1818 and is headquartered in St. Louis, Missouri.

Be sure to add Bunge Limited (BG) to your Watch List and if you haven’t done so already, check in on the performance of our Current Portfolio. Keep it simple and always do your due diligence.

This material is provided for informational purposes only and is not financial advice. The information contained herein should not solely be used for the formation of an investment decision, whether you are a long term or short term investor.