Is It Time To Consider Buying Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA)?

While Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) might not be the most widely known stock at the moment, it saw significant share price movement during recent months on the NYSE, rising to highs of US$47.11 and falling to the lows of US$42.17. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Industrias Bachoco. de's current trading price of US$44.30 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Industrias Bachoco. de’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Industrias Bachoco. de

What's the opportunity in Industrias Bachoco. de?

Good news, investors! Industrias Bachoco. de is still a bargain right now according to my price multiple model, which compares the company's price-to-earnings ratio to the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 8.44x is currently well-below the industry average of 22.1x, meaning that it is trading at a cheaper price relative to its peers. What’s more interesting is that, Industrias Bachoco. de’s share price is quite stable, which could mean two things: firstly, it may take the share price a while to move closer to its industry peers, and secondly, there may be less chances to buy low in the future once it reaches that value. This is because the stock is less volatile than the wider market given its low beta.

What does the future of Industrias Bachoco. de look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -16% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Industrias Bachoco. de. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Although IBA is currently trading below the industry PE ratio, the adverse prospect of negative growth brings about some degree of risk. Consider whether you want to increase your portfolio exposure to IBA, or whether diversifying into another stock may be a better move for your total risk and return.

Are you a potential investor? If you’ve been keeping an eye on IBA for a while, but hesitant on making the leap, I recommend you research further into the stock. Given its current price multiple, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. Case in point: We've spotted 2 warning signs for Industrias Bachoco. de you should be mindful of and 1 of them is a bit concerning.

If you are no longer interested in Industrias Bachoco. de, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.