Entering text into the input field will update the search result below

Post-Pandemic Normalization Will Bring Some Challenges For Grupo Bimbo

Stephen Simpson profile picture
Stephen Simpson


  • Bimbo saw significant and volume share gains in North America during the pandemic, but post-pandemic normalization will threaten those volumes and the operating leverage that came with them.
  • Product innovation needs to remain an ongoing focus of management, as does further supply, manufacturing, and logistics improvements in the North American and European markets.
  • Value-destructive empire-building through M&A remains a prime concern among many analysts, though smaller deals to add scale in the profitable QSR business and sub-scale geographies could make sense.
  • Low-to-mid single-digit revenue growth and modest margin improvements can support a share price 20% higher than today's price with decent ongoing potential beyond that.

As people stayed home during the pandemic, Grupo Bimbo (OTCPK:BMBOY) (OTCPK:GRBMF) was one of the packaged foods companies to benefit. The company definitely saw a hit to its foodservice channels, as well as vending and convenience stores, due to the lockdowns, but increased at-home consumption of breads and other bakery products drove strong growth in North America and Europe, leading to meaningful operating leverage.

As consumer habits normalize once lockdown restrictions go away and people feel more confident going out, I expect Bimbo face some challenges. Just as a shift to staying at home drove volume growth, a shift back toward pre-pandemic behaviors should pressure volumes. With that potential volume pressure, it will be even more important for management to execute on supply chain, manufacturing, and distribution initiatives (many of which were delayed during the pandemic) to offset volume/scale pressures.

I was lukewarm on Bimbo shares back in September, and while the shares have since underperformed the S&P 500, they have done pretty well relative to other packaged food companies. The shares do look undervalued today, with 20% or more upside in the near term.

These shares look roughly as undervalued as Gruma (OTCPK:GPAGF) (OTCPK:GMKKY), but I’d note that where Gruma has a strong ROIC and operating track record, and minimal M&A risk, Bimbo has a poor M&A track record and more work to do on operating efficiency. Gruma, then, is a more defensive play with some offensive/growth characteristics, while Bimbo is more of an ongoing self-improvement story.

Holding On To Volume Gains Will Be Challenging

Bimbo saw double-digit growth in its North American operations throughout the pandemic (all four quarters of 2020), led largely by volume growth that was driven by pantry-stocking and a shift to at-home eating. While there were negative impacts to the company’s foodservice channels, the greater skew to quick

This article was written by

Stephen Simpson profile picture
Stephen Simpson is a freelance financial writer and investor.Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds).

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (2)

mister-ugly profile picture
Bimbo has a fan following with Hispanics. Core base will continue support their Brand don’t underestimate them.
Stephen Simpson profile picture
@mister-ugly That "fan following" hasn't saved them from a decade-plus of value-destroying M&A.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!


SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on BMBOY

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.