Fomento Economico Mexicano (NYSE:FMX) Issues Quarterly Earnings Results, Beats Estimates By $0.06 EPS

Fomento Economico Mexicano (NYSE:FMX) announced its earnings results on Wednesday. The company reported $1.10 earnings per share for the quarter, topping analysts’ consensus estimates of $1.04 by $0.06, Zacks reports. Fomento Economico Mexicano had a return on equity of 7.78% and a net margin of 3.98%. The firm had revenue of $13.03 billion for the quarter, compared to the consensus estimate of $12.84 billion.

Here are the key takeaways from Fomento Economico Mexicano’s conference call:

• OXXO México traffic recovery accelerated: Same-store sales increased 9.2%, with traffic up 3.5% and market-share gains across relevant categories despite limited World Cup benefit and a soft Mexican consumer environment. Management attributed the improvement primarily to stronger execution in impulse categories, coffee-led food service, and early testing of daily-replenishment offerings.
• Consolidated earnings were strong: FEMSA’s third-quarter revenue rose 9.8%, operating income increased 9.9%, and net income surged 81% to MXN 10.6 billion. Coca-Cola FEMSA delivered 10.9% revenue growth and 15.4% operating-income growth, although the latter included a one-time insurance benefit.
• OXXO profitability remains pressured by investments and restructuring: OXXO México’s gross margin declined 120 basis points as affordability initiatives and commercial-income timing weighed on results, while operating margin fell 40 basis points. The closure of approximately 250 underperforming stores will create another near-term earnings impact, and rising wages and a shorter workweek are expected to increase labor costs.
• Bara and international OXXO operations showed momentum: Bara’s same-store sales grew 10.3% and it added 112 net stores, with newer cohorts maturing faster; management expects expansion to accelerate further. OXXO Colombia also posted high-single-digit mature-store traffic growth and is viewed as ready for faster expansion.
• Several businesses remain challenged: FEMSA recorded an additional MXN 430 million non-cash credit-risk provision related to Colombia’s healthcare system, while health profitability also declined in Chile. European results weakened because of German traffic disruptions and Valora’s U.S. B2B account losses, and OXXO Brazil continued to weigh on segment profitability.

Fomento Economico Mexicano Trading Up 0.6%

Shares of FMX stock opened at $124.39 on Friday. The company has a quick ratio of 0.85, a current ratio of 1.14 and a debt-to-equity ratio of 0.41. The firm has a market cap of $42.98 billion, a P/E ratio of 31.96, a price-to-earnings-growth ratio of 0.66 and a beta of 0.41. The business has a 50-day moving average price of $121.03 and a two-hundred day moving average price of $118.18. Fomento Economico Mexicano has a 12-month low of $90.87 and a 12-month high of $141.47.

Fomento Economico Mexicano Cuts Dividend

The company also recently declared a quarterly dividend, which was paid on Monday, October 26th. Shareholders of record on Wednesday, October 14th were paid a dividend of $1.7804 per share. This represents a $7.12 annualized dividend and a yield of 5.7%. This is a decrease from Fomento Economico Mexicano’s previous quarterly dividend of $1.8270. The ex-dividend date of this dividend was Wednesday, October 14th. Fomento Economico Mexicano’s dividend payout ratio is presently 46.20%.

Analyst Upgrades and Downgrades

A number of analysts recently issued reports on FMX shares. JPMorgan Chase & Co. upgraded shares of Fomento Economico Mexicano from a “neutral” rating to an “overweight” rating and raised their price objective for the stock from $126.00 to $151.00 in a report on Friday, October 16th. Barclays lifted their target price on Fomento Economico Mexicano from $125.00 to $130.00 and gave the company an “equal weight” rating in a report on Tuesday, July 14th. Benchmark raised shares of Fomento Economico Mexicano to an “overweight” rating in a report on Friday, October 16th. Bank of America raised shares of Fomento Economico Mexicano from a “neutral” rating to a “buy” rating and raised their target price for the company from $125.00 to $150.00 in a research note on Tuesday, August 4th. Finally, Zacks Research lowered shares of Fomento Economico Mexicano from a “strong-buy” rating to a “hold” rating in a research report on Tuesday, August 4th. Four equities research analysts have rated the stock with a Buy rating and four have issued a Hold rating to the company. Based on data from MarketBeat.com, the company has a consensus rating of “Moderate Buy” and a consensus price target of $140.50.

Key Fomento Economico Mexicano News

Here are the key news stories impacting Fomento Economico Mexicano this week:

• Positive Sentiment: FEMSA reported third-quarter revenue of approximately $13.03 billion, above the $12.84 billion analyst consensus cited by MarketBeat. The company also reported EPS of $1.10 versus a $1.04 consensus estimate in that data set, providing a favorable headline surprise. MarketBeat FEMSA earnings report
• Positive Sentiment: OXXO Mexico delivered strong sales and supported overall revenue growth, demonstrating continued consumer demand and resilience in FEMSA’s key retail business. Zacks FEMSA Q3 earnings article
• Neutral Sentiment: FEMSA posted consolidated net income of about 10.57 billion Mexican pesos. Management discussed the quarter during the earnings call, but investors will likely focus on whether operating improvements can offset cost and margin pressures. MarketScreener FEMSA earnings flash
• Negative Sentiment: Despite strong OXXO sales and revenue growth, Q3 earnings missed estimates according to Zacks. Margin pressure across key divisions weighed on profitability, with the reported net margin at 3.60%, limiting the benefit of higher sales. Zacks FEMSA Q3 earnings article

Insiders Place Their Bets

In other news, Director Michael David Kahn bought 2,100 shares of the company’s stock in a transaction that occurred on Tuesday, August 11th. The stock was bought at an average price of $118.13 per share, for a total transaction of $248,073.00. Following the transaction, the director directly owned 2,100 shares of the company’s stock, valued at $248,073. This represents a ∞ increase in their position. The acquisition was disclosed in a document filed with the Securities & Exchange Commission, which is available through this hyperlink. 5.68% of the stock is owned by insiders.

About Fomento Economico Mexicano

Fomento Económico Mexicano, SAB. de C.V. (FEMSA) is a Monterrey, Mexico-based multinational company with operations focused on beverage bottling, retail and related consumer services. The company traces its origins to 1890, when it was established as a brewery in Monterrey, and has since developed into one of Latin America’s largest consumer-facing businesses.

FEMSA’s principal beverage business is Coca-Cola FEMSA, which produces, markets, sells and distributes Coca-Cola trademark beverages and other nonalcoholic drinks.