Grupo Sura and Grupo Argos shares are below their book value

If you are one of the 7,938 holders of Grupo Argos shares, you should know that each of these securities has a value of $ 15,420, according to your behavior in the last day on the Colombian Stock Exchange (BVC). But if we go to the books, this value is higher; amounts to $ 18,423. The same happens with the company’s preferred stock, which has a trading price of $ 10,270.

Tobin’s Q is used to look at how below or above the price of a stock is compared to its book value, so named because the person who introduced the concept in 1969 was the American economist, James Tobin, who received the Nobel Prize in 1981. for its disruptive analysis of financial markets and its relationships with spending, employment, production and price decisions.

This indicator shows the relationship between the closing price of the asset in the stock market and the book price. That is, how many times does the market recognize the equity value of the asset. If the stock is overvalued, the Tobin Q will be greater than 1 and if it is undervalued, the indicator will be less than 1.

“This is just one of the instruments to start looking at whether stocks can be cheap or expensive,” added Omar Suárez, manager of equity strategy at Casa de Bolsa.

For Grupo Argos common and preferred shares, this indicator is 0.82 and 0.53, respectively.

In the case of Grupo Sura, its common share was traded at $ 25,150 in the last day before its suspension, while its book value amounted to $ 41,429.39. The company’s preferred security is trading at $ 23,320. Tobin’s Q for them is 0.61 and 0.58.

“The low value that the Argos and Sura groups have in Q de Tobin stands out. Both should be at least 1 ”, said Andrés Moreno, financial and stock market analyst.

In fact, the average target price recorded by Bloomberg for Sura’s common stock is $ 28,720, more than $ 3,500 above the closing of the security before its suspension. The same happens with the average price target for the preferred species, of $ 28,800.

The target price data provided by Bloomberg is the hypothetical price that a financial asset should reach according to its stock market analysis. An indicator that can be added to Tobin’s Q when making investment decisions.

Tobin’s Q indicator below 1 is repeated in the species of other companies of the Grupo Empresarial Antioqueño (GEA), such as Cementos Argos (preferential), Celsia, Enka and Valores Simesa, which registered a distortion in their prices on the stock market.

A different case happens with the Grupo Nutresa title. After resuming trading, the stock has risen 6.5% to $ 28,500 on the BVC, a price that is above its book value of $ 18,088.18. Tobin’s Q is higher than the previous ones, 1.59. The listing price on the BVC also exceeds Bloomberg’s average target of $ 28,029.

Tobin’s Q indicator above 1 is repeated with Bancolombia (preferred and ordinary), Protección and Cementos Argos (ordinary), shares that are above the book value.

“The logical thing would be for the book value to be equal to the price of a company in a bag. But since it is not, Tobin’s Q is an indicator of the company’s value generation. However, sometimes the market has the conception that, if Tobin’s Q is above 1, the asset is expensive and if it is below it is cheap. But this is not necessarily the case. The indicator should not be viewed individually, but added to others to define an investment, ”said Diego Franco, Head of Investments at Franco Capital Management LLC.

There are 15 species that have a Tobin Q indicator above 1. Canacol Energy is the title with the highest data, 2.47, followed by Ecopetrol (2.05), Promigas (2.00), ISA (1.86) and GEB (1.71).

Takeover bids drive the market

The BVC experienced a rally in the middle of last week. The Msci Colcap index rose as much as 6% on Wednesday, the most in the world after Argentina’s Merval index, according to data compiled by Bloomberg. The rebound was the highest since March 2020, after the Gilinski Group made its second offer in less than a month to buy Grupo Sura.
Despite this, the behavior in the last day was mixed and the Msci Colcap fell 0.62% to 1,431.94 units.

Probability of Nutresa passing into the hands of the Gilinskis has dropped from 75% to 64%

Diego Alexander Restrepo, Ph.D. in Economics and Finance from Binghamton University and head of the Finance Department at Eafit, analyzed the probability of success of the Nutresa takeover bid for the Gilinksi. According to Restrepo, this has gone from 75% to 64%, an approximate figure according to the model proposed by William Samuelson and Leonard Rosenthal. According to this, the price at which the stock is traded in the days during the period of receipt of offers from the OPA has valuable information to infer the probability of success.