American Depository Receipts (ADRs) of
Gruma S.A.B. de CV
) scaled a new 52-week high of $47.93 during its trading session on
Gruma S.A.B. closed at $47.85, reflecting a solid year-to-date
return of 57%. The trading volume for the session was 0.02 million
ADRs. Earnings estimate revisions for 2014 and 2015 indicate
further upward potential for this processed and packaged goods
Last month, Gruma S.A.B. took strategic decisions of buying a
Spanish tortilla maker and divesting its Mexican wheat flour
operations. The twin transactions were aimed at expanding the
company's market presence as well as focusing on core business
Gruma S.A.B. will purchase Mexifood Spain, a leading local producer
of wheat tortillas, corn tortillas, chips, tortilla chips and
Mexican sauces, for $15 million. The transaction will make Gruma
S.A.B. the third largest tortilla maker in Europe.
Also, the company signed an agreement with Grupo Trimex, S.A. de
C.V. to sell its Mexican wheat flour operations at $200 million.
The transaction, subject to regulatory approvals, is expected to
complete by the end of Oct 2014.
Additionally, Gruma S.A.B. fared well in first-quarter 2014. Net
earnings, in local currency, soared 279% year over year driven by
healthy top-line performance and margin improvement. Revenues
climbed 2.6% on the back of a solid performance in the U.S. Sales
volumes increased 1% to 1.04 million tons. The top-line growth was
complemented by improvement in cost of sales, which as a percentage
of revenue, was 66.2% versus 68.1% in the year-ago quarter. This,
in turn, improved the gross margin.
Estimate Revisions Show Potency
In the last 60 days, the Zacks Consensus Estimate for Gruma S.A.B.
has gone up 3.1% to $2.00 for 2014 and 3.8% to $2.17 for 2015.
Gruma S.A.B. currently has a $5.2 billion market capitalization and
sports a Zacks Rank #1 (Strong Buy). Other companies worth
considering in the industry include
The Hillshire Brands Company
Wilmar International Limited
). All these stocks hold a Zacks Rank #2 (Buy).
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