GRBMF - Share Loss And Margin Compression At Grupo Bimbo Leave A Sour Taste
2024-06-11 11:55:11 ET
Summary
- Bimbo shares have underperformed, as the company has missed lowered expectations for a few quarters now and seen both volume share losses and margin compression.
- Management doesn't yet seem to want to address the market share issues in the U.S., including the risk that continuing with above-average pricing could drive more share to private label.
- Limited additional leverage from lower input costs and wage pressures add further complications to the price/margin/share trade-offs.
- Bimbo shares don't look expensive now, but I'd prefer to see some stabilization in U.S. volume trends across its major categories before getting more bullish.
Grupo Bimbo, S.A.B. de C.V. (BMBOY)(GRBMF)(BIMBOA.MX) management has some real work to do, and although quarterly presentational materials are not a reliable insight into how a management thinks about its business, I'm concerned that management may not yet be realistic in its assessment of what's going on and what needs to be done. Bimbo shares have been weak since my last update , falling about 13% at a time when the S&P Food & Beverage Select index has climbed about 12% and rivals like Flowers Foods, Inc. ( FLO ) have also outperformed the company's shares. While misses relative to sell-side expectations and lower guidance certainly explain at least some of the underperformance, I think the Street is also increasingly worried about the company's ongoing market share losses in the U.S. and the future ramifications on revenue and margins....
Share Loss And Margin Compression At Grupo Bimbo Leave A Sour Taste