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Are Investors Undervaluing Fomento Economico Mexicano (FMX) Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Fomento Economico Mexicano (FMX - Free Report) . FMX is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 16.97. This compares to its industry's average Forward P/E of 21.92. FMX's Forward P/E has been as high as 26.50 and as low as 16.64, with a median of 21.41, all within the past year.

Investors will also notice that FMX has a PEG ratio of 1.93. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. FMX's industry currently sports an average PEG of 2.81. Over the last 12 months, FMX's PEG has been as high as 2.18 and as low as 1.22, with a median of 1.48.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FMX has a P/S ratio of 0.85. This compares to its industry's average P/S of 1.24.

Finally, investors will want to recognize that FMX has a P/CF ratio of 7.16. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. FMX's current P/CF looks attractive when compared to its industry's average P/CF of 20.97. Within the past 12 months, FMX's P/CF has been as high as 18.02 and as low as 7.13, with a median of 10.46.

These are just a handful of the figures considered in Fomento Economico Mexicano's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that FMX is an impressive value stock right now.


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