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Contributors: Douglas McIntyre Jon C. Ogg

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Thursday, July 27, 2006

Bunge Proved the Naysayers Wrong

We noted back on June 26th that the reaction to Bunge’s (BG) earnings warning may be too much. The company this morning put out earnings ahead of lowered expectations and the 2006 guidance of $3.50 to $3.67 EPS was in-line with estimates of $3.59. This still gives it a forward P/E of 15, which shouldn’t hurt too many feelings out there. On June 26, BG closed at $49.00 (down from $52.44 before the warning), and shares are currently up at $54.50. This is also viewed as a defensive or secular stock because they are the largest pure-play on soybeans in the US. The “defensive stock strategy” may be a help to the stock, but the negative news last month was just blown out of proportion. Those two reasons are why the shares are actually now higher than before the warning. BG shares have traded north of $60 on numerous occasions over the last 18 to 20 months, but they haven’t been able to stay there. That still leaves plenty of room from here to there.

Jon C. Ogg
July 27, 2006

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