Fomento Economico Mexicano (FMX) AI Stock Analysis

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Fomento Economico Mexicano

(NYSE:FMX)

73Outperform

Fomento Economico Mexicano's overall score reflects a blend of strong technical momentum and solid financial performance, albeit with some concerns. The company's revenue growth and stable profit margins are strengths, but increased leverage and challenges in cash flow management pose risks. Technical indicators show strong upward trends, although high valuation metrics suggest caution. The stock's performance is supported by strategic initiatives to address operational challenges, but investors should remain cautious of high valuations and leverage.

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

Market Cap

$22.03B

Dividend Yield1.88%

Average Volume (3M)705.28K

Price to Earnings (P/E)21.5

Beta (1Y)0.36

Revenue Growth-0.37%

EPS Growth44.52%

CountryUS

Employees394,010

SectorUtilities

Sector Strength80

IndustryBeverages - Alcoholic

Share Statistics

EPS (TTM)0.86

Shares Outstanding214,845,300

10 Day Avg. Volume526,888

30 Day Avg. Volume705,281

Financial Highlights & Ratios

PEG Ratio0.79

Price to Book (P/B)1.12

Price to Sales (P/S)0.00

P/FCF Ratio22.13

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$111.75

Price Target Upside3.63% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering4

Fomento Economico Mexicano Business Overview & Revenue Model

Company DescriptionFomento Económico Mexicano, S.A.B. de C.V. (FMX) is a leading Mexican multinational company with diverse operations primarily in the beverage and retail sectors. The company operates through its subsidiaries, including Coca-Cola FEMSA, the largest franchise bottler of Coca-Cola products in the world by sales volume, and FEMSA Comercio, which includes OXXO, the largest convenience store chain in Latin America. FMX is also involved in the logistics and distribution services through Solistica and holds a significant stake in Heineken N.V., one of the world's largest beer companies.

How the Company Makes MoneyFMX generates revenue through multiple streams. Coca-Cola FEMSA contributes significantly to its earnings by producing and distributing Coca-Cola beverages across various Latin American markets. It earns money from the sale of a wide range of non-alcoholic beverages, including carbonated drinks, bottled water, and juices. FEMSA Comercio generates revenue through its OXXO convenience stores, which offer everyday consumer products, food, and beverages, as well as financial services through OXXO's banking correspondents. Additionally, FMX derives income from its logistics operations via Solistica, providing integrated supply chain solutions. The company's investment in Heineken N.V. also provides dividend income and strategic advantages in the alcoholic beverage sector. Strategic partnerships with Coca-Cola and other international companies enhance its revenue potential and market reach.

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.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
781.59B	702.69B	673.20B	556.26B	492.97B
	Gross Profit
321.42B	279.51B	251.67B	213.71B	189.65B
	EBIT
70.67B	57.36B	31.39B	28.91B	8.02B
	EBITDA
95.08B	109.03B	61.91B	56.90B	36.07B
	Net Income Common Stockholders
13.50B	65.69B	23.91B	28.50B	4.12B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
183.05B	191.84B	83.49B	121.82B	107.89B
	Total Assets
851.54B	805.86B	798.62B	737.50B	684.64B
	Total Debt
256.29B	232.90B	280.64B	246.85B	241.81B
	Net Debt
116.46B	67.78B	197.20B	149.44B	134.58B
	Total Liabilities
469.62B	427.49B	459.96B	402.68B	377.45B
	Stockholders Equity
297.50B	303.86B	338.66B	334.82B	307.19B
Cash Flow		Free Cash Flow
24.20B	11.56B	40.14B	52.79B	33.03B
	Operating Cash Flow
71.51B	49.68B	72.58B	73.09B	53.17B
	Investing Cash Flow
-33.12B	132.29B	-46.43B	-46.17B	-31.37B
	Financing Cash Flow
-84.05B	-92.55B	-35.90B	-36.99B	19.57B

Fomento Economico Mexicano Technical Analysis

Technical Analysis Sentiment

Positive

Last Price107.84

Price Trends

50DMA

100.03

Positive

100DMA

93.12

Positive

200DMA

94.21

Positive

Market Momentum

MACD

1.44

Negative

RSI

65.29

Neutral

STOCH

91.00

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FMX, the sentiment is Positive. The current price of 107.84 is above the 20-day moving average (MA) of 103.70, above the 50-day MA of 100.03, and above the 200-day MA of 94.21, indicating a bullish trend. The MACD of 1.44 indicates Negative momentum. The RSI at 65.29 is Neutral, neither overbought nor oversold. The STOCH value of 91.00 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BUD	79 Outperform	$135.41B	23.13	7.31%	0.94%	0.64%	10.02%
ABEV	78 Outperform	$39.80B	15.70	15.09%	4.90%	1.25%	-13.02%
FMX	73 Outperform	$22.03B	21.51	9.84%	1.88%	-0.37%	44.52%
CCU	72 Outperform	$2.62B	15.08	11.33%	1.93%	6.18%	61.39%
SAM	70 Outperform	$2.75B	40.76	7.36%	―	0.79%	-24.27%
TAP	68 Neutral	$11.44B	11.38	7.90%	3.16%	-5.17%	-0.74%
Sector *	63 Neutral	$8.57B	10.13	4.66%	4.38%	3.79%	-12.91%

* Utilities Sector Average

Performance Comparison

FMX

Fomento Economico Mexicano

107.84

-4.85

-4.30%

BUD

Anheuser-Busch Inbev Sa

68.56

3.10

4.74%

SAM

Boston Beer

243.25

-28.34

-10.43%

CCU

Compania Cervecerias Unidas SA

14.03

0.62

4.62%

TAP

Molson Coors

56.95

3.49

6.53%

ABEV

Ambev SA

2.52

0.36

16.67%

Fomento Economico Mexicano Earnings Call Summary

Earnings Call Date:Apr 28, 2025

(Q1-2025)

% Change Since: 1.34%|

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.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.