Fomento Economico Mexicano (FMX) AI Stock Analysis

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Fomento Economico Mexicano

(NYSE:FMX)

Rating:65Neutral

Price Target:

$110.00

▲(7.36%Upside)

Fomento Economico Mexicano's financial performance is robust with strong revenue growth, but concerns over leverage and declining net income weigh on the outlook. Technical analysis suggests cautious sentiment, and while the earnings call shows promise, operational challenges remain. Valuation is fair, making the overall outlook moderately positive but tempered by risks.

Fomento Economico Mexicano (FMX) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$21.78B

Dividend Yield1.73%

Average Volume (3M)453.98K

Price to Earnings (P/E)22.0

Beta (1Y)0.31

Revenue Growth-0.37%

EPS Growth44.52%

CountryUS

Employees394,010

SectorUtilities

Sector Strength74

IndustryBeverages - Alcoholic

Share Statistics

EPS (TTM)0.90

Shares Outstanding214,845,300

10 Day Avg. Volume412,729

30 Day Avg. Volume453,976

Financial Highlights & Ratios

PEG Ratio4.20

Price to Book (P/B)1.13

Price to Sales (P/S)0.00

P/FCF Ratio1.68

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$110.25

Price Target Upside7.60% Upside

Rating ConsensusHold

Number of Analyst Covering4

Fomento Economico Mexicano Business Overview & Revenue Model

Company DescriptionFomento Economico Mexicano, S.A.B. de C.V. (FMX), commonly known as FEMSA, is a leading Mexican multinational company with diverse operations across various sectors. It is primarily engaged in the retail and beverage industries, operating the largest convenience store chain in Mexico, OXXO. FEMSA also has significant interests in the beverage sector through its ownership of Coca-Cola FEMSA, the largest franchise bottler of Coca-Cola products in the world. Additionally, FEMSA has a health division that includes operations in the pharmacy sector.

How the Company Makes MoneyFEMSA generates revenue through multiple channels. The company earns a substantial portion of its income from its retail division, primarily through OXXO stores, which offer convenience products and services across numerous locations in Mexico and Latin America. Another major revenue stream is Coca-Cola FEMSA, which produces, markets, and distributes Coca-Cola beverages in various countries, benefiting from exclusive bottling agreements with The Coca-Cola Company. FEMSA's health division also contributes to its earnings through retail pharmacy sales. The company's growth and earnings are supported by strategic partnerships with The Coca-Cola Company and its ability to expand its retail footprint into new markets.

Fomento Economico Mexicano Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q1-2025)

% Change Since: -3.71%|

Next Earnings Date:Jul 23, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with notable revenue growth driven by Coca-Cola FEMSA and Spin by OXXO, along with successful store expansions. However, significant challenges were noted in Proximity Americas and Europe, as well as operational pressures from cost increases and a weak performance in Health Mexico. While there are strategic initiatives underway to address these challenges, the balance between positive achievements and ongoing challenges leads to a cautious outlook.

Q1-2025 Updates

Positive Updates

Revenue and Operating Income Growth

FEMSA reported an 11.1% increase in total revenues and a 4.9% growth in operating income for the first quarter of 2025. On a comparable basis, total revenues and operating income grew by 5.6% and 1.7%, respectively.

Strong Performance in Coca-Cola FEMSA

Coca-Cola FEMSA delivered a solid quarter with a 10% increase in top line growth, supported by revenue management initiatives, despite soft volume trends in Mexico.

Spin by OXXO Growth

Spin by OXXO continues to gain traction with its active user base showing double-digit growth to 8.9 million active users, and the Spin Premia loyalty program expanding to 42.5% of OXXO Mexico sales.

Successful Store Base Expansion

OXXO Mexico opened 361 net new stores during the first quarter, showing strong expansion efforts.

Positive Trends in Health Division

The Health division reported revenue growth of 21% in pesos or 7% on a comparable basis, with strong performances in Colombia, Chile, and Ecuador.

Negative Updates

Proximity Americas Challenges

Proximity Americas reported a decline of 1.8% in same-store sales, with average traffic contracting by 6.6% due to a challenging consumer environment in Mexico.

Operational Pressure from Cost Increases

Higher operating expenses in Proximity Americas resulted from increased labor costs and reduced operating leverage, leading to an 11.8% decline in income from operations.

Weak Financial Performance in Europe

Proximity Europe showed an 18% increase in revenues in pesos but faced a 14.6% decrease in income from operations, reflecting a challenging environment in the higher margin B2B foodservice segment.

OXXO Traffic Decline

Traffic at OXXO Mexico has been declining for four consecutive quarters, impacted by a soft consumer environment and increased competition from the traditional trade.

Weak Performance in Health Mexico

FEMSA Health in Mexico underperformed with a 11.5% decline in same-store sales, prompting a full operational turnaround strategy.

Company Guidance

In the first quarter of 2025, FEMSA navigated a challenging environment, particularly in Mexico, with Proximity Americas experiencing a 1.8% contraction in same-store sales, though average ticket grew by 5.1% slightly ahead of inflation. Same-store traffic declined by 6.6%, continuing a trend from previous quarters, largely attributed to a soft consumer environment, unfavorable calendar setup, and external factors such as weather and macroeconomic conditions. To counteract these challenges, FEMSA launched initiatives to drive traffic and top line growth, maintain gross margin expansion, and contain costs. They emphasized increasing affordability across categories and expanding their retail media and financial services. Despite a slow start, FEMSA expects a high single-digit revenue increase and stable operating margins for the full year, anticipating improvements in the second half of the year.

Fomento Economico Mexicano Financial Statement Overview

Summary

Fomento Economico Mexicano presents a strong financial performance with solid revenue growth and stable profit margins. However, increased leverage and a drop in net income raise concerns. The absence of recent cash flow data further complicates complete financial health evaluation. The company should focus on improving profitability and managing debt levels to enhance financial stability.

Income Statement

Positive

The company demonstrates strong revenue growth over the years, with a notable increase from 2023 to 2024. The gross profit margin and net profit margin have remained stable, indicating efficient cost management. However, the net income in 2024 is significantly lower than in 2023, suggesting potential challenges in profitability or extraordinary items affecting net income.

Balance Sheet

Positive

Fomento Economico Mexicano shows a solid equity base with a healthy equity ratio. However, the debt-to-equity ratio has increased slightly from the previous year, indicating higher leverage. Return on equity has decreased, suggesting that the company might not be utilizing its equity as effectively as before.

Cash Flow

Neutral

The cash flow statements indicate fluctuations, with operating cash flow and free cash flow not reported in 2024. Over the years, the free cash flow has shown growth, but the lack of recent data hampers a full assessment. The company's cash flow management needs attention to ensure sustainable operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	728.62B	781.59B	702.69B	673.20B	556.26B	492.97B
Gross Profit	298.42B	321.51B	279.51B	251.67B	213.71B	189.65B
EBITDA	75.65B	123.43B	109.03B	61.91B	56.90B	36.07B
Net Income	27.05B	26.73B	65.69B	23.91B	28.50B	4.12B
Balance Sheet
Total Assets	820.42B	851.54B	805.86B	798.62B	737.50B	684.64B
Cash, Cash Equivalents and Short-Term Investments	169.42B	183.05B	191.84B	83.49B	121.82B	107.89B
Total Debt	237.86B	256.30B	232.90B	280.64B	246.85B	241.81B
Total Liabilities	455.16B	470.40B	427.49B	459.96B	402.68B	377.45B
Stockholders Equity	290.75B	297.50B	303.86B	338.66B	334.82B	307.19B
Cash Flow
Free Cash Flow	26.23B	24.20B	11.56B	40.14B	52.79B	33.03B
Operating Cash Flow	66.27B	71.51B	49.68B	72.58B	73.09B	53.17B
Investing Cash Flow	-18.31B	-33.12B	132.29B	-46.43B	-46.17B	-31.37B
Financing Cash Flow	-91.83B	-84.05B	-92.55B	-35.90B	-36.99B	19.57B

Fomento Economico Mexicano Technical Analysis

Technical Analysis Sentiment

Negative

Last Price102.46

Price Trends

50DMA

104.18

Negative

100DMA

100.03

Positive

200DMA

94.51

Positive

Market Momentum

MACD

-0.01

Negative

RSI

44.90

Neutral

STOCH

59.49

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FMX, the sentiment is Negative. The current price of 102.46 is below the 20-day moving average (MA) of 103.51, below the 50-day MA of 104.18, and above the 200-day MA of 94.51, indicating a neutral trend. The MACD of -0.01 indicates Negative momentum. The RSI at 44.90 is Neutral, neither overbought nor oversold. The STOCH value of 59.49 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FMX.

Fomento Economico Mexicano Risk Analysis

Fomento Economico Mexicano disclosed 34 risk factors in its most recent earnings report. Fomento Economico Mexicano reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Fomento Economico Mexicano Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BUD	79 Outperform	$136.53B	23.50	7.31%	1.55%	0.58%	9.94%
ABEV	75 Outperform	$38.76B	14.72	15.09%	3.64%	1.25%	-13.02%
CCU	73 Outperform	$2.47B	14.06	11.33%	3.25%	6.18%	61.39%
FMX	65 Neutral	$21.78B	21.99	9.84%	1.73%	-0.37%	44.52%
SAM	65 Neutral	$2.21B	32.78	7.36%	―	0.79%	-24.27%
TAP	65 Neutral	$10.02B	9.93	7.90%	3.81%	-5.17%	-0.74%
Sector *	61 Neutral	C$4.83B	-11.13	-17.85%	4.44%	11.13%	-68.91%

* Utilities Sector Average

Performance Comparison

FMX

Fomento Economico Mexicano

102.46

-7.51

-6.83%

BUD

Anheuser-Busch Inbev Sa

67.51

7.93

13.31%

SAM

Boston Beer

193.89

-90.85

-31.91%

CCU

Compania Cervecerias Unidas SA

12.89

1.05

8.87%

TAP

Molson Coors

49.55

0.71

1.45%

ABEV

Ambev SA

2.40

0.42

21.21%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 10, 2025