Gruma - Valuation Is More Interesting, But Grain Prices And Competition Are Threats To Consider
Source: SeekingAlpha
2025-01-28 12:59:26 ET
Summary
- Gruma shares have been more volatile in the face of rising corn prices and increased competition from PepsiCo's acquisition of Siete Foods.
- Gruma's U.S. market is crucial, generating over half of sales and two-thirds of EBITDA, with both significant growth potential in premium products and a new, larger, competitor.
- Corn prices historically make up about 40% of COGS and corn prices have been rising recently; the extent to which Gruma can offset this pressure with operational efficiencies is key.
- Gruma shares could be 20% undervalued today, but management must continue to execute on market-expanding product development and marketing and operational efficiencies.
Since my last update on Mexican tortilla and corn flour giant Gruma ( OTCPK:GPAGF ) ( OTCPK:GMKKY ) (GRUMAB.MX) there have been multiple developments of note. While the company continues to do well with respect to market share in the U.S. and continues to outperform sell-side expectations, corn prices have started rising and the company is soon to face some increased competition as PepsiCo ( PEP ) enters the space through its acquisition of Siete Foods ....
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Gruma - Valuation Is More Interesting, But Grain Prices And Competition Are Threats To Consider
Gruma S.A.B. de C.V.
NASDAQ: GPAGF
GPAGF Trading
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