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Grupo Aeroportuario del Sureste, S.A.B. de C.V.

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Grupo Aeroportuario del Sureste, S.A.B. de C.V. (ASR - Free Report) , or Southeast Airport Group, recently delivered strong first quarter results driven by a strong increase in passenger traffic.

Earnings estimates have been steadily rising as a result, sending the stock to a Zacks #1 Rank (Strong Buy) stock. Based on current consensus estimates, analysts expect 21% EPS growth this year and 12% growth next year.

On top of this growth, the company pays a dividend that yields a juicy 3.9%.

Mexican Monopoly

Southeast Airport Group is a Mexican airport operator with concessions to operate, maintain and develop the airports in tourist-heavy southeast Mexico, including Cancún, Veracruz and Cozumel.

The company was formed in 1998 after the Mexican government decided to privatize some of its airports. The company has experienced strong and relatively steady revenue and profit growth since then as it essentially has a monopoly on the airports in southeast Mexico.

First Quarter Results

Southeast Airport Group delivered strong first quarter results on April 24. Earnings per share came in at $1.40, beating the Zacks Consensus Estimate of $1.26. It was a 29% increase over the same quarter in 2011.

Total revenues soared 21% year-over-year, driven by a 10% increase in passenger traffic. The number of domestic passengers grew 20% while the number of international passengers rose 6%.

Operating income increased 25% as the company leveraged its fixed expenses. The operating margin for Q1 was a remarkable 56.7%, up from 54.8% in the same quarter last year.

Estimates Rising

Estimates have been marching higher following Southeast Airport Group's strong Q1 results, sending the stock to a Zacks #1 Rank (Strong Buy) stock.

The Zacks Consensus Estimate for 2012 is now $4.61, representing 21% growth over 2011 EPS. The 2013 consensus estimate is currently $5.19, corresponding with 12% growth.

As you can see in the Price & Consensus chart, consensus estimates have been soaring, along with the stock price, over the last several months:

: Southeast Airport Group

Strong Dividend

On top of strong growth, Southeast Airport Group offers a dividend that yields a solid 3.9%. The company pays an annual dividend based on its annual net retained earnings. In May 2012, it paid a dividend of $2.76 per share, up from $2.55 in 2011.

Reasonable Valuation

Shares of ASR are up 38% since I first wrote about it back on September 21. But the valuation picture still looks reasonable.

Shares trade at 15.6x 12-month forward earnings, a discount to its 10-year median of 17.4x. Its price to book ratio of 1.7 is in-line with its peers.

The Bottom Line

With a virtual monopoly on the airports in a tourist-heavy region of Mexico, Southeast Airport Group should deliver strong earnings growth for many years. With rising earnings estimates, a fat dividend yield and reasonable valuation, this stock offers attractive total return potential.

Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service.

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