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Reasons to Retain America Movil (AMX) Stock in Your Portfolio

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America Movil (AMX - Free Report) is expected to benefit from increasing broadband client base and wireless subscriber additions. The company’s focused 5G efforts are noteworthy.

AMX stock is down 11% from its 52-week high level of $22.65 on May 27, 2022, making it more affordable for investors. The company’s shares are up 35.3% over a year against a 2.8% decline recorded by the Zacks sub-industry.

Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.

Zacks Investment Research
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Business Tailwinds

America Movil provides integrated telecommunications services in Latin America. It offers enhanced communications solutions in 25 countries in Latin America, the United States and Central and Eastern Europe.

The company takes advantage of the investments it has made in new technologies over the previous years to expand the reach and capacity of the business. The new technologies help in handling huge traffic surges without sacrificing quality or speed.

The recent acquisition of Nextel Brazil from NII Holdings allows the company to expand its market share in Brazil. It also helps the company to strengthen its mobile network capacity, spectrum portfolio and market position in the postpaid segment.

America Movil’s 2022 and 2023 earnings are expected to improve 23.5% and 15.3%, respectively, year over year.

America Movil has an impressive earnings surprise history. The company outpaced estimates in all the trailing four quarters, delivering an earnings surprise of 20.6%, on average.

Apart from having solid fundamentals, AMX has a Growth Score of B. This style score consolidates all the essential metrics from a company’s financial statements to get a true sense of the quality and sustainability of its growth.

A Few Headwinds

Wall Street has been facing extreme volatility due to various economic factors. The current interest rate hike by Federal Reserve coupled with the ongoing Russia-Ukraine war and pandemic-induced supply chain woes have made investors uncertain about the global economic recovery.

Apart from prevailing macroeconomic uncertainty, America Movil’s aggressive promotional strategy to increase its smartphone sales through promotional discounts and subsidized offers is likely to negatively impact its profitability.

Stiff competition from AT&T’s entry into the Mexican telecom industry and Vivo in Brazil is an added headwind.

A highly leveraged balance sheet implies the company is under pressure to meet debt obligations. As of Mar 31, 2022, America Movil had MxP176,429 million in cash, marketable securities and other short-term investments with MxP445,321 million of long-term debt.

Stocks to Consider

Some better-ranked stocks from the broader technology space are Aspen Technology (AZPN - Free Report) , Synopsys (SNPS - Free Report) and Broadcom (AVGO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Aspen Technology’s 2022 earnings is pegged at $5.50 per share, increasing 1.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 18.4%.

Aspen Technology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 4.1%. Shares of AZPN have increased 30.6% in the past year.

The Zacks Consensus Estimate for Synopsys 2022 earnings is pegged at $8.47 per share, rising 7.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 19.6%.

Synopsys earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 2.7%. Shares of SNPS have increased 8.4% in the past year.

The Zacks Consensus Estimate for Broadcom’s fiscal 2022 earnings is pegged at $37.03 per share, up 3.8% in the past 60 days. AVGO’s long-term earnings growth rate is pegged at 14.5%.

Broadcom’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 2.2%. Shares of AVGO have increased 0.6% in the past year.