Fomento Economico Mexicano (NYSE:FMX) Posts Quarterly Earnings Results, Beats Expectations By $0.87 EPS

Fomento Economico Mexicano (NYSE:FMX) issued its quarterly earnings results on Tuesday. The company reported $0.93 earnings per share for the quarter, topping analysts’ consensus estimates of $0.06 by $0.87, FiscalAI reports. Fomento Economico Mexicano had a net margin of 3.40% and a return on equity of 7.33%. The company had revenue of $13.20 billion for the quarter, compared to the consensus estimate of $12.94 billion.

Here are the key takeaways from Fomento Economico Mexicano’s conference call:

• OXXO Mexico showed improving underlying momentum, with same-store sales up 9.5% and traffic growth turning positive at 2% after eight quarters of declines. Management attributed the gains partly to the World Cup but said strategic changes around pricing, assortment, coffee, food, and customer focus are also beginning to deliver market-share gains.
• FEMSA reported consolidated revenue growth of 9.3%, operating-income growth of 7.2%, and net-income growth of 64.9% in the quarter. Cost controls, restructuring, lower foreign-exchange losses, and strong performance at Coca-Cola FEMSA in Brazil and Colombia supported results, while net debt-to-EBITDA improved to 1.15 times.
• Bara and international OXXO operations remain major growth opportunities. Bara added a record 112 net stores while maintaining double-digit same-store sales growth, and management said Colombia’s improved economics support faster expansion; both Colombia and Brazil are expected to reach approximately 700 stores by year-end.
• Spin by OXXO’s monthly active users rose 22% year over year, and FEMSA is partnering with QED Investors to cautiously develop consumer lending using a low-and-grow approach. Management emphasized that credit remains early-stage and high-risk, with any eventual funding expected to become increasingly non-recourse to FEMSA.
• Management expects World Cup tailwinds to fade and comparisons to become more difficult in the second half, while Mexico’s consumer environment remains sluggish. OXXO Mexico’s gross margin fell 70 basis points as FEMSA prioritized affordability, and the health division was pressured by Mexico weakness, Chilean competition, and a MXN 408 million provision tied to Colombian healthcare credit risk.

Fomento Economico Mexicano Price Performance

NYSE:FMX traded down $3.81 during mid-day trading on Wednesday, hitting $123.92. 29,661 shares of the stock traded hands, compared to its average volume of 463,577. The business’s 50-day moving average price is $126.12 and its 200 day moving average price is $116.61. The company has a quick ratio of 0.87, a current ratio of 1.16 and a debt-to-equity ratio of 0.47. The company has a market cap of $42.82 billion, a PE ratio of 27.77, a price-to-earnings-growth ratio of 0.71 and a beta of 0.41. Fomento Economico Mexicano has a 12-month low of $83.08 and a 12-month high of $141.47.

Fomento Economico Mexicano Increases Dividend

The company also recently disclosed a quarterly dividend, which was paid on Monday, July 27th. Stockholders of record on Wednesday, July 15th were given a $1.827 dividend. This represents a $7.31 dividend on an annualized basis and a dividend yield of 5.9%. This is an increase from Fomento Economico Mexicano’s previous quarterly dividend of $0.67. The ex-dividend date was Wednesday, July 15th. Fomento Economico Mexicano’s dividend payout ratio (DPR) is 54.36%.

Institutional Inflows and Outflows

Large investors have recently bought and sold shares of the company. AQR Capital Management LLC raised its position in shares of Fomento Economico Mexicano by 19.0% in the first quarter. AQR Capital Management LLC now owns 6,072 shares of the company’s stock worth $593,000 after buying an additional 969 shares in the last quarter. Northwestern Mutual Wealth Management Co. grew its position in Fomento Economico Mexicano by 2,006.2% during the second quarter. Northwestern Mutual Wealth Management Co. now owns 337 shares of the company’s stock worth $35,000 after buying an additional 321 shares in the last quarter. New York State Common Retirement Fund purchased a new position in Fomento Economico Mexicano during the second quarter worth about $429,000. EverSource Wealth Advisors LLC increased its stake in Fomento Economico Mexicano by 61.0% in the 2nd quarter. EverSource Wealth Advisors LLC now owns 1,156 shares of the company’s stock worth $119,000 after acquiring an additional 438 shares during the last quarter. Finally, Jump Financial LLC purchased a new stake in shares of Fomento Economico Mexicano in the 2nd quarter valued at about $504,000. 61.00% of the stock is owned by institutional investors.

Wall Street Analysts Forecast Growth

A number of research analysts have weighed in on FMX shares. Barclays boosted their target price on shares of Fomento Economico Mexicano from $125.00 to $130.00 and gave the company an “equal weight” rating in a research note on Tuesday, July 14th. Zacks Research raised Fomento Economico Mexicano from a “hold” rating to a “strong-buy” rating in a report on Thursday, April 30th. Weiss Ratings upgraded Fomento Economico Mexicano from a “hold (c-)” rating to a “hold (c)” rating in a research note on Monday, May 11th. UBS Group upped their price target on Fomento Economico Mexicano from $122.00 to $139.00 and gave the company a “buy” rating in a research report on Thursday, May 28th. Finally, JPMorgan Chase & Co. lifted their price objective on Fomento Economico Mexicano from $117.00 to $126.00 and gave the stock an “overweight” rating in a report on Friday, June 26th. One analyst has rated the stock with a Strong Buy rating, four have issued a Buy rating and three have assigned a Hold rating to the stock. According to MarketBeat.com, the stock has a consensus rating of “Moderate Buy” and an average target price of $119.50.

About Fomento Economico Mexicano

Fomento Económico Mexicano, SAB. de C.V. (FEMSA) is a Mexican multinational company active primarily in the retail and beverage sectors. Headquartered in Monterrey, Mexico, FEMSA’s operations span convenience store retailing, beverage bottling and distribution, and related logistics and consumer services. The company’s business model combines high-frequency retail outlets with large-scale beverage production and a regional supply chain network.

FEMSA Comercio, the company’s retail arm, operates a large chain of convenience stores under the OXXO brand and has expanded its retail footprint with complementary formats and services.