Stock Worth Buying: Gruma S.A.B. - Analyst Blog

Zacks Investment Research upgraded Gruma S.A.B. de CV GMK to a Zacks Rank #1 (Strong Buy) on Jun 24, 2014. Going by the Zacks model, companies holding a Zacks Rank #1 have strong chances of performing better than the broader market.

Why the Upgrade?

Gruma S.A.B. de CV reported impressive results for first-quarter 2014 on Apr 23, 2014. Since then, the company's share price has risen by 39.5% while yielding a return of 52.9% year-to-date. Net earnings, in local currency, soared 279% year over year.

Revenues climbed 2.6% year over year driven by healthy performance in the U.S. Sales volumes at 1.04 million tons, represented a year over year hike of 1%. The top-line growth was complemented by improvement in cost of sales, which as a percentage of revenue, stood at 66.2% versus 68.1% in the year-ago quarter. This, in turn, improved the gross margin.    

The stellar performance in first-quarter 2014 triggered positive revisions in earnings estimates. Over the last 60 days, the Zacks Consensus Estimate for Gruma S.A.B. de CV increased 3.1% to $2.00 for 2014 and remained stable at $2.17 for 2015.

Higher earnings estimates along with an average positive earnings surprise of 51.7%, has made us hopeful of another quarter of upbeat results from Gruma S.A.B. de CV.

Other Stocks to Consider

Gruma S.A.B. de CV currently has a $5.0 billion market capitalization. Other companies worth considering in the industry include The Hillshire Brands Company HSH, Limoneira Company LMNR and Wilmar International Limited (WLMIY). While The Hillshire Brands sports a Zacks Rank #1 (Strong Buy), both Limoneira and Wilmar International carry a Zacks Rank #2 (Buy).