We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why FEMSA (FMX) Stock Should Be Part of Your Portfolio Now
Read MoreHide Full Article
Fomento Economico Mexicano, S.A.B. de C.V. (FMX - Free Report) , alias FEMSA, has been taking strategic measures such as increasing store count, diversifying business portfolio and focusing on core business activities to drive growth.
You must hold on to the stock, which is marching ahead of its industry now. Shares of FEMSA jumped 20.9% year to date, compared with the Zacks categorized Beverages – Soft Drinks industry’s gain of 6.6%. Further, the stock is supported by a Growth Score of “A” and a long-term earnings growth rate of 12.5%, which clearly justifies its growth prospects.
While the Zacks Consensus Estimate of 64 cents for first-quarter 2017 has been stable lately, it represents a 30.6% growth year over year. Also, analysts polled by Zacks expect revenues of $5,868 million for the said quarter, up nearly 23% from the prior-year period. We note that the company’s top line has outpaced the Zacks Consensus Estimate for three straight quarters now.
Let’s Take a Look at the Growth Catalysts
Armed with a solid business portfolio, FEMSA is a leading company with exposure in various industries including beverage, beer and retail, which gives it an edge over its competitors. The company mainly gets its exposure to the beverage industry through Coca-Cola FEMSA S.A.B. de C.V. (KOF - Free Report) , which operates as the world’s largest franchise bottler for The Coca-Cola Company (KO - Free Report) products. Also, it enjoys a notable position in the beer industry as it owns the second largest stake in Heineken NV (HEINY - Free Report) , a leading brewer with operations over 70 countries. We note that FEMSA is making significant progress in its strategy of expanding in the small-box retail segment.
Notably, FEMSA has been taking prudent steps to diversify its product portfolio. It has also been enhancing its footprint and business operations through strategic acquisitions for a while now. Further, the company is expanding its drugstore operations and aggressively seeking to capitalize on the growing drugstore business. In fact, FEMSA seems to be on track with its efforts to build infrastructure and integrate its four legacy drugstore operations into a single operating platform. We believe FEMSA’s venture into the drugstore business strategically fits its chain store business, and will be accretive to both its top and bottom lines in the long term.
Hurdles/Concerns
However, FEMSA has a mixed record of earnings surprises in recent quarters, with a miss recorded in the last two quarters. Moreover, the company continues to witness margin pressures due to the incorporation and growth of lower-margin businesses in FEMSA Comercio’s Health division. Further, persisting currency headwinds and regulatory pressures might weigh upon the company’s future results.
Bottom Line
We believe FEMSA has the potential to efficiently overcome these hurdles by capitalizing on its growth drivers, thus making it an investors’ favorite.
FEMSA is slated to report first-quarter 2017 results on Apr 28, before the opening bell.
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why FEMSA (FMX) Stock Should Be Part of Your Portfolio Now
Fomento Economico Mexicano, S.A.B. de C.V. (FMX - Free Report) , alias FEMSA, has been taking strategic measures such as increasing store count, diversifying business portfolio and focusing on core business activities to drive growth.
You must hold on to the stock, which is marching ahead of its industry now. Shares of FEMSA jumped 20.9% year to date, compared with the Zacks categorized Beverages – Soft Drinks industry’s gain of 6.6%. Further, the stock is supported by a Growth Score of “A” and a long-term earnings growth rate of 12.5%, which clearly justifies its growth prospects.
While the Zacks Consensus Estimate of 64 cents for first-quarter 2017 has been stable lately, it represents a 30.6% growth year over year. Also, analysts polled by Zacks expect revenues of $5,868 million for the said quarter, up nearly 23% from the prior-year period. We note that the company’s top line has outpaced the Zacks Consensus Estimate for three straight quarters now.
Let’s Take a Look at the Growth Catalysts
Armed with a solid business portfolio, FEMSA is a leading company with exposure in various industries including beverage, beer and retail, which gives it an edge over its competitors. The company mainly gets its exposure to the beverage industry through Coca-Cola FEMSA S.A.B. de C.V. (KOF - Free Report) , which operates as the world’s largest franchise bottler for The Coca-Cola Company (KO - Free Report) products. Also, it enjoys a notable position in the beer industry as it owns the second largest stake in Heineken NV (HEINY - Free Report) , a leading brewer with operations over 70 countries. We note that FEMSA is making significant progress in its strategy of expanding in the small-box retail segment.
Notably, FEMSA has been taking prudent steps to diversify its product portfolio. It has also been enhancing its footprint and business operations through strategic acquisitions for a while now. Further, the company is expanding its drugstore operations and aggressively seeking to capitalize on the growing drugstore business. In fact, FEMSA seems to be on track with its efforts to build infrastructure and integrate its four legacy drugstore operations into a single operating platform. We believe FEMSA’s venture into the drugstore business strategically fits its chain store business, and will be accretive to both its top and bottom lines in the long term.
Hurdles/Concerns
However, FEMSA has a mixed record of earnings surprises in recent quarters, with a miss recorded in the last two quarters. Moreover, the company continues to witness margin pressures due to the incorporation and growth of lower-margin businesses in FEMSA Comercio’s Health division. Further, persisting currency headwinds and regulatory pressures might weigh upon the company’s future results.
Bottom Line
We believe FEMSA has the potential to efficiently overcome these hurdles by capitalizing on its growth drivers, thus making it an investors’ favorite.
FEMSA is slated to report first-quarter 2017 results on Apr 28, before the opening bell.
Currently, FEMSA carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>