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As an investor, I look for investments which does not compromise one fundamental factor for another. By this I mean, I look at stocks holistically, from their financial health to their future outlook. In the case of Bunge Limited (NYSE:BG), it is a financially-robust company with a strong track record superior dividend payments, trading at a discount. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, read the full report on Bunge here.
Good value with adequate balance sheet and pays a dividend
BG's strong financial health means that all of its upcoming liability payments are able to be met by its current cash and short-term investment holdings. This implies that BG manages its cash and cost levels well, which is an important determinant of the company’s health. BG’s earnings amply cover its interest expense. Paying interest on time and in full can help the company get favourable debt terms in the future, leading to lower cost of debt and helps BG expand. BG is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. According to my intrinsic value of the stock, which is driven by analyst consensus forecast of BG's earnings, investors now have the opportunity to buy into the stock to reap capital gains. Compared to the rest of the food industry, BG is also trading below its peers of similar sizes in terms of their assets. This bolsters the proposition that BG's price is currently discounted.
BG rewards its shareholders with attractive dividend yield, higher than the low-risk savings rate, which is what investors want in order to compensate them for the risk of holding a stock. That said, please remember that dividend yields are a function of stock prices and corporate profits, both of which can be volatile.
For Bunge, there are three key factors you should further research:
- Future Outlook: What are well-informed industry analysts predicting for BG’s future growth? Take a look at our free research report of analyst consensus for BG’s outlook.
- Historical Performance: What has BG's returns been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of BG? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.