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Bear of the Day: Bunge (BG)

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Headquartered in White Plains, NY, Bunge Limited (BG - Free Report) is a leading agribusiness and food company with integrated operations all over the world. It is a global leader in oilseed processing, and grain & oilseed marketing. The company has five business segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer.

The company IPO’d in 2001 and has expanded though many significant acquisitions since then.

Disappointing Results

The company reported adjusted earnings of 75 cents per share, missing the Zacks Consensus Estimate of 79 cents. Their Sugar & Bioenergy was impacted by lower than expected Brazilian ethanol prices.

"Our earnings improved sequentially and year-over-year, although they continued to be impacted by market and industry headwinds. As a result, we are reducing our earnings guidance for the year in Agribusiness and Sugar & Bioenergy,” said the CEO.

Falling Estimates

Analysts have been slashing their estimates for the company after weak results. Zacks Consensus Estimates for the current and next year have fallen to $2.97 per share and $4.85 per share from $3.42 and $5.14 respectively, 30 days back.

The Bottom Line

Farmers and agribusinesses have been struggling due to bumper crops over the past few years.

As the company generates most of its revenues from its Agribusiness segment, it remains vulnerable to commodity price, weather and foreign exchange trends. Further the company does not have any pricing power and operates on thin margins.

The stock is down more than 10% this year but a rebound does not appear likely any time soon.

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