Is Bunge Limited stock a bargain after the recent decline?

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Bunge Limited (NYSE:BG) has considerably lost its value since topping $127 in April this year. The stock currently trades at $88, a decline of about 30%. However, we believe Bunge ticks the boxes as a good stock. 

Bunge is a food and agribusiness company. Rising global food prices this year have been supporting the stock. With the supply induced demand continuing, Bunge stands to benefit. However, the prospects of a recession and business hits in Eastern Europe have been a concern. 

Arguably, Bunge stock’s rise to high valuations early this year could have accelerated selling, forcing a decline. However, the stock trades at a lower forward PE ratio of 6.863. The current PE ratio of the company is 7.573. The trading is indicative that investors project increased earnings for the stock in the future. How about the short-term outlook? 

Bunge logged in earnings that missed estimates in the second quarter. The missed earnings reflected transportation snarl-ups and pandemic-related concerns. In the US, the company’s agribusiness unit performance was adversely impacted by rising ocean freight. That means it is not all rosy for the company despite an insatiable demand for its products globally.

For its third-quarter results on October 26, Bunge is expected to post an EPS of $2.48. The earnings are below last year’s $3.7. The EPS in the second quarter was $2.97. The reported earnings could be the yardstick for the stock’s next move. 

BG trades on a descending trendline on the weekly chart

Source – TradingView

On the weekly chart, BG trades on a system of lower highs and lower lows. The price has kept a short-term trendline. The stock is recovering towards the descending trendlines.

On the MACD indicator, the momentum is weakening, and the price remains in the bear zone. 

Should you buy Bunge Limited

Bunge remains a favourable stock for investors. However, the current bear momentum could take time to abate. The price could continue to recover up to the descending trendline. Investors should wait for the quarter results before considering buying the current dip.

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