Stock Worth Buying: Gruma S.A.B.

Zacks Equity Research
June 24, 2014

Zacks Investment Research upgraded Gruma S.A.B. de CV (GMK) to a Zacks Rank #1 (Strong Buy) on Jun 24, 2014. Going by the Zacks model, companies holding a Zacks Rank #1 have strong chances of performing better than the broader market.

Why the Upgrade?

Gruma S.A.B. de CV reported impressive results for first-quarter 2014 on Apr 23, 2014. Since then, the company’s share price has risen by 39.5% while yielding a return of 52.9% year-to-date. Net earnings, in local currency, soared 279% year over year.

Revenues climbed 2.6% year over year driven by healthy performance in the U.S. Sales volumes at 1.04 million tons, represented a year over year hike of 1%. The top-line growth was complemented by improvement in cost of sales, which as a percentage of revenue, stood at 66.2% versus 68.1% in the year-ago quarter. This, in turn, improved the gross margin.    

The stellar performance in first-quarter 2014 triggered positive revisions in earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for Gruma S.A.B. de CV increased 3.1% to $2.00 for 2014 and remained stable at $2.17 for 2015.

Higher earnings estimates along with an average positive earnings surprise of 51.7%, has made us hopeful of another quarter of upbeat results from Gruma S.A.B. de CV.

Other Stocks to Consider

Gruma S.A.B. de CV currently has a $5.0 billion market capitalization. Other companies worth considering in the industry include The Hillshire Brands Company (HSH), Limoneira Company (LMNR) and Wilmar International Limited (WLMIY). While The Hillshire Brands sports a Zacks Rank #1 (Strong Buy), both Limoneira and Wilmar International carry a Zacks Rank #2 (Buy).

Read the Full Research Report on LMNR
Read the Full Research Report on HSH
Read the Full Research Report on GMK
Read the Full Research Report on WLMIY


Zacks Investment Research