Bunge Limited

Bunge continues to beat Wall Street estimates as fertilizers and agribusiness boom. The company has surprised on estimates 4 consecutive quarters on average of 73.91%. Bunge's forward P/E is 8.40.

Company Description

Bunge Limited (BG - Snapshot Report) is an agriculture food company with operations in over 30 countries.

The company, a Zacks #1 Rank (Strong Buy), manufactures fertilizers, originates oilseeds and grains, crushes oilseeds to make food for the livestock industry, produces bottled oils, mayonnaise, margarines and other food products, and mills wheat and corn for food processors, bakeries and other commercial customers.

Bunge has large operations in Brazil and Argentina as it operates 40 fertilizer facilities, including mines and blending plants, in the two countries.

BG to Acquire Corn Products International

On June 23, Bunge announced it was acquiring Corn Products International (CPO - Snapshot Report) in an all-stock transaction. Corn Products is the largest producer of dextrose in the world and manufactures starches, high fructose corn syrups and glucose. The company has 35 plants in 15 countries.

Corn Products stockholders will receive common shares of Bunge with a market value of $56.00 for each share. After the transaction closes, Corn Products shareholders will own 21% of Bunge. The transaction is expected to close in the fourth quarter of 2008.

Bunge believes Corn Products corn business will compliment its soybean-heavy segments.

"Combining with Corn Products provides a unique opportunity for Bunge to establish an integrated, global presence in the corn value chain, which is highly complementary to our existing operations," stated Alberto Weisser, Bunge Limited’s Chairman and Chief Executive Officer.

Bunge Beat Wall Street Second Quarter Estimates by 97.08%

On July 24, Bunge reported that its second quarter profit had quadrupled and earnings per share were $4.73 per share compared to analysts' estimates of $2.40 per share, a surprise of 97.08%.

Revenues rose 73% to $14.36 billion from $8.30 billion in 2007.

As expected given the demand for fertilizers, the company's fertilizer segment remained strong worldwide, especially in Brazil, where Bunge is the largest fertilizer supplier. But it was the strength of its agribusiness segment which really led earnings in the second quarter. Profit rose 329% to $614 million in that segment from $143 million in the year ago period.

BG Raises Full Year Guidance

The company is bullish about the remainder of 2008. BG believes fertilizer fundamentals should remain strong and agribusiness margins should be solid, even if there's a softening in demand for products.

Given the solid fundamentals, Bunge sharply raised full year guidance to the range of $11.60 to $11.90 from $9.35 to $9.65.

Analysts Raise Estimates for the Third Quarter and the Year

Brokerage analysts have been raising estimates in response to the second quarter results. In the last month, third quarter estimates rose to $2.67 from $2.51 per share. Full year estimates jumped to $11.42 from $9.58 per share, which is in the middle of the company's guidance range.

Value Fundamentals

Bunge is trading at 8.4x its forward earnings. Its price-to-book (P/B) is 1.19. The company has a solid five year average return on equity (ROE) of 14.37%. Additionally, BG pays a dividend, with a current yield of 0.80%.