With more than 10,000 products with brands such as Ricolino, Sanissimo, Milpa Real, Barcel, Plusvita, Donuts, Takis etc., Grupo Bimbo is the leading bakery for production and sales worldwide, quantifyingly representing 4.5% of the global market, as it has presence in 32 countries with a sales report of US $ 15.0 Bn.
There are 4 markets that make up 100% of sales for Grupo Bimbo; North America symbolizes 50%, Mexico contributes 31%, while South America and EAA (Europe, Asia and Africa), 10% and 9% respectively.
GB's reach and influence is exorbitant, as it supports 199 plants around the world, +3.3 million points of sale and has +138,000 employees, in addition to being presumed to enjoy one of the most extensive distribution networks great in the world.
In addition to this, GB is a pioneer in the fusion between sustainability in the company and laying the foundations that formalize its application. More than 130 plants, almost 70% of all plants, are certified under the standards of the Global Food Safety Initiative (the GFSI community works voluntarily and is made up of the world's leading experts in food safety), 7 innovation centers and 2 food laboratories work on improving nutritional profiles and creating new products guarantee their work, in addition, by 2017, 47% of the portfolio is part of the Best & Better categories, in general, GB is the first place in the ranking Merco as the most responsible company in Mexico since 2014.
FINANCE
As for the relationship between sales and operating profit for GB, there has been sustained growth from 2016 to 2018, where, historically since 2016, the last year has been the most significant with a sales amount of 288.3 trillion Mexican pesos and an operating profit of 31.7 trillion pesos, with net sales being the factor that has reported constant growth.
MARKET CAPITALIZATION
Bimbo today has a price per share of $ 40.77 listed in the IPC, with 4,703,200,000 shares outstanding, which results in a market capitalization of 192.13B (value of the company at the price of mkt) that in the Mexican market we indicates that this corporate has a “Midscaps” size (taking the market capitalization of AMXL for 986.21B and OMAB for 45.63B as a measurement parameter). In other words, the equity value of this company can be largely understood by this number.
Behavior of the returns of GB of the year 2018
PERFORMANCE AND RISK
Based on all of 2018, historical performance data shows us a negative average performance of -1.35% (based on the monthly closing price of the share).
On the other hand, the risk assessment calculated for this period (historical standard deviation) is 5.73%.
The systematic risk for GB is represented by 0.66, which can be considered a defensive value, since it has a lower risk for the market, that is, the GB share will move 66% of what the IPC moves.
With the understanding that the GB beta will not be diversifiable and once the risk-free rate is discounted, in addition to the market performance, we can arrive at the valuation of this asset expecting a rate of return of 2.2% (Capital Asset Pricing Model), which compared to the historical performance of -1.35% clearly indicates that this asset is not necessarily the best investment option at this time.
WORKING CAPITAL MANAGEMENT AND PROFITABILITY
Doing an analysis on the financial cycle of the company, we found a sound financial administration once the BIMBO cash conversion cycle has been determined, given that; For the year 2018, GB has between one and two days in its favor, a number that indicates that it will not be necessary to resort to some type of financing to pay debts, in other words, "customers pay suppliers".
ROI behavior since 2015 Grupo Bimbo
According to the return on investment (ROI) or return on total assets (ROA), GB had a performance of 2.18% during 2018, a figure that is mainly sensitized by net income directly, rather than simply by the variations in revenue / sales, given the DuPont analysis. This means that to make the investment in this corporate company more attractive, GB would have to optimize the management of its general expenses, reduce its long-term debt, reduce unnecessary resources (personnel and materials), it would even be necessary to do an introspective analysis on inventory costs;; if the optimal cost is feasible according to the response of the GB provider, etc.,in order to obtain a greater profit margin and thus increase the return on investment or return on total assets.
VALUATION
In general, shareholders are willing to pay up to 2.24 times the book price of BIMBO, which indicates that it has less liquidity compared to the sector average, given that the Price to Book of the industry is 4.01.
Comparing the price with respect to the amount of cash flow that the company generates per share "Price to Free Cash Flow", GB trades its shares (stock Price) 53.94 times the cash flow per share.
BIMBO is trading at 45.37 times its price for EPS (earnings per share), meaning shareholders are paying 45.37 for each peso in GB earnings.
For this, it is interesting to compare the 31.18 that the industry charges for each peso in earnings, which, being less, disfavors GB, as it follows that BIMBO's shares are overvalued compared to the sector.
REFERENCES
- https://www.investing.com/equities/bimbo-ahttps://www.investing.com/indices/ipchttps://www.investing.com/equities/america-movil-lhttps://www.investing. com / equities / oma-b
