Back to top

Image: Bigstock

Things You Must Note Ahead of FEMSA's (FMX) Q2 Earnings

Read MoreHide Full Article

Fomento Economico Mexicano, S.A.B. de C.V. (FMX - Free Report) or FEMSA is slated to report second-quarter 2021 results on Jul 28. The company is likely to register top and bottom-line growth when it reports quarterly results. The Zacks Consensus Estimate for its second-quarter earnings of 94 cents per share suggests 191.3% growth from the year-ago quarter’s reported figure.

The consensus mark for quarterly revenues is pegged at $6.43 billion, indicating growth of 30.9% from that reported in the year-ago quarter. In the last reported quarter, the company delivered an earnings surprise of 89.7%.

Factors at Play

FEMSA has been benefiting from the continued focus on enhancing customer experiences through digital and technological advancements. It has been keen on offering customers more options to make contactless purchases by intensifying digital and technology-driven initiatives across operations. Gains from the actions are likely to have aided digital sales in the second quarter. The company’s Coca-Cola FEMSA business has been leading the way with its omni-channel business, while FEMSA Comercio has been progressing with the adoption of digital initiatives.

Within its OXXO store chains, the company is anticipated to have witnessed gains from investments in digital offerings, loyalty programs and fintech platforms.

The company is also poised to benefit from growth via its acquisition strategy. It has been on track to expand in the U.S. specialized distribution industry through the acquisitions of two businesses. The acquisitions are expected to have contributed to the top line in the to-be-reported quarter.

The company’s second-quarter performance is expected to have witnessed gains from recovering economic trends as markets reopen due to the subsiding of the pandemic-related headwinds. Momentum in FEMSA Comercio’s Health division, which has been a tailwind in the pandemic-led environment, is also expected to have aided its performance. The segment is likely to have gained from the continued demand for medical assistance. Positive trends in Mexico and South America operations along with favorable currency translations are expected to have been tailwinds.

However, FEMSA’s second-quarter performance is expected to have witnessed continued margin pressures due to operating deleverage across some segments. Soft traffic and lower mobility are expected to have been headwinds for FEMSA Comercio’s Proximity and Fuel Divisions.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for FEMSA this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

FEMSA has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks Likely to Deliver Earnings Beat

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat:

Darling Ingredients Inc. (DAR - Free Report) has an Earnings ESP of +10.09% and it presently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Archer Daniels Midland Company (ADM - Free Report) currently has an Earnings ESP of +2.55% and a Zacks Rank #2.

Mondelez International, Inc. (MDLZ - Free Report) has an Earnings ESP of +2.47% and a Zacks Rank #3 at present.

Published in