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Bunge Ltd Stock Downgraded (BG)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Bunge (NYSE:BG) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and poor profit margins.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Food Products industry. The net income increased by 95.7% when compared to the same quarter one year prior, rising from $92.00 million to $180.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 20.9%. Since the same quarter one year prior, revenues rose by 14.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.96, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that BG's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.
  • The gross profit margin for BUNGE LTD is currently extremely low, coming in at 5.20%. Regardless of BG's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.21% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. In comparison to the other companies in the Food Products industry and the overall market, BUNGE LTD's return on equity is significantly below that of the industry average and is below that of the S&P 500.
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Bunge Limited, through its subsidiaries, engages in agriculture and food business worldwide. The company has a P/E ratio of 24.1, above the S&P 500 P/E ratio of 17.7. Bunge has a market cap of $10.32 billion and is part of the consumer goods sector and food & beverage industry. Shares are down 5.1% year to date as of the close of trading on Tuesday.

You can view the full Bunge Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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