Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, looks well-poised for growth, given its investments in digital and technology-driven initiatives. The company is on track with its strategy of creating a national distribution platform in the United States through the expansion of its footprint in the specialized distribution industry. It also displays strong financial flexibility.
FEMSA’s bottom line surpassed the Zacks Consensus Estimate in third-quarter 2022, while revenues lagged. However, the company’s revenues improved year over year, driven by gains across all business units, resulting from effective growth strategies and robust demand across markets. FEMSA’s digital initiatives and business expansion endeavors have also been aiding its results.
Backed by the solid third-quarter performance, the Zacks Rank #3 (Hold) company’s shares have rallied 23.6% in the past three months compared with the industry’s growth of 4.8%. FEMSA’s shares also compared favorably with the Consumer Staple sector’s growth of 2.3% and the S&P 500’s rise of 0.3%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Let’s take a sneak peek into the factors positioning FEMSA for growth.
Image Source: Zacks Investment Research
FEMSA has been focusing on offering customers more options to make contactless purchases by intensifying digital and technology-driven initiatives across operations. The company’s Coca-Cola FEMSA KOF is leading the way with its omni-channel business, while FEMSA Comercio is progressing with the adoption of digital initiatives.
Coca-Cola FEMSA is the flagship segment, engaged in the production and distribution of carbonated beverages. The division is the largest Coca-Cola KO bottler in Latin America and the second-largest Coca-Cola bottler globally in terms of sales volume.
Coca-Cola is on track with its strategy of becoming a total beverage company through last year’s streamlining of its portfolio, focusing on the core brands and investing in its portfolio of brands to meet the evolving consumer need. KO is diversifying its portfolio to tap into the rapidly growing RTD category. The company’s expansion initiatives are likely to aid Coca-Cola FEMSA’s results.
Coming to FEMSA digital initiatives, the company’s OXXO store chain is on track with investing in digital offerings, loyalty programs and fintech platforms to evolve stronger after the pandemic and over the long term. Its OXXO digital wallet, OXXO Premia and loyalty program have been performing well.
Recently, FEMSA agreed to acquire all outstanding shares of NetPay, which offers payment services and solutions to micro, small and medium-sized businesses in Mexico. The deal, which is likely to close in the first quarter of fiscal 2023, will help expand FEMSA’s digital payments portfolio, which includes the Spin by OXXO wallet and OXXO Premia’s loyalty strategy.
In the third quarter, the company made progress on its digital efforts, with the continued addition of OXXO Premia and Spin by OXXO customers at an accelerated Pace. Spin by OXXO received its definitive authorization to operate as a fintech in Mexico. Spin by OXXO reached 4.3 million users (more than 69% active), while OXXO Premia reached 22.3 million loyalty users (above 61% active).
Anheuser-Busch InBev BUD, alias AB InBev, is another beverage company focused on investing in the latest capabilities for several years to better connect with customers and consumers. BUD has been rapidly growing its digital platform, leveraging technology such as B2B sales and other e-commerce platforms.
AB InBev is witnessing an acceleration in its B2B platforms, e-commerce and digital marketing trends, which has been aiding growth in the past few months. BUD’s proprietary B2B platform, BEES, is live in 18 markets and has reached 2.9 million monthly active users. BEES captured $7.4 billion in gross merchandise value in the third quarter, reflecting a year-over-year improvement of more than 60%.
FEMSA has been gaining from its effective growth strategies and robust demand across most markets. The company has been on track with its strategy of creating a national distribution platform in the United States through the expansion of its footprint in the specialized distribution industry. Its venture in the specialized distribution industry relates to its plan of investing in adjacent businesses, which can leverage capabilities across different markets, providing an opportunity for attractive growth and risk-adjusted returns.
With the presence of its OXXO business and other retail operations, the company has become an expert in the organization and management of supply chains and distribution systems. Notably, FEMSA serves a large number of businesses and retail customers through millions of interactions in different industries.
FEMSA has been witnessing gross-margin pressures for the past few quarters. The company continued to witness a gross-margin decline in third-quarter 2021 due to contraction at Proximity, Health, Fuel, Logistics & Distribution, and Coca-Cola FEMSA segments. The gross margin contracted 110 bps at Proximity, 50 bps at Health, 10 bps at Fuel operations, 20 bps at Logistics & Distribution, and 70 bps at Coca-Cola FEMSA. Supply-chain disruptions and higher raw material costs also hurt the results.
Although the company continues to witness gross margin pressures due to contractions at all operating segments, it is well-poised for growth in the long term, backed by its expansion and growth plans.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CocaCola Company The (KO) : Free Stock Analysis Report
Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report
AnheuserBusch InBev SANV (BUD) : Free Stock Analysis Report
Coca Cola Femsa S.A.B. de C.V. (KOF) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Related Quotes
Good things could be on the horizon when a stock surpasses the 20-day simple moving average. How should investors react?
Recently, Zacks.com users have been paying close attention to Bank of America (BAC). This makes it worthwhile to examine what the stock has in store.
PRNDY vs. STZ: Which Stock Is the Better Value Option?
Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Marathon Oil…
Shares of Salesforce fell despite the company's Q3 earnings beat after news of co-CEO Bret Taylor resigning and weakened fourth-quarter guidance.
Uncertainty regarding the length and duration of the downturn have hung over the market like an anvil this year, with many investors afraid to buy the dip for fear of suffering further declines. Add to that the Federal Reserve Bank's relentless campaign of rising interest rates to combat persistent inflation, and it's no wonder that consumers and investors alike have shifted their behavior based on the tough macroeconomic conditions. Netflix (NASDAQ: NFLX) surged 9.2%, Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) jumped 5.4%, honorary member Microsoft (NASDAQ: MSFT) climbed 5.8%, while Apple (NASDAQ: AAPL) and Amazon (NASDAQ: AMZN) each rallied 4.5% by the time the market closed on Wednesday.
UnitedHealth (UNH) has received quite a bit of attention from Zacks.com users lately. Therefore, it is wise to be aware of the facts that can impact the stock's prospects.
The S&P 500 jumped above the key 200-day level on Fed chief Powell's comments. But inflation data and the jobs report loom.
Rushing to buy Chinese electric car stocks after an earnings miss, are investors making a big mistake?
Shareholders will get one share in the new company in January for every three company shares they hold.
Pharmaceutical giant Pfizer (NYSE: PFE) is no stranger to investors; the company is a longtime staple in the healthcare industry. It got a lift in late 2020 and in 2021 as one of the COVID-19 vaccine suppliers, but investors seem to have grown bored with Pfizer's story, and the stock is down about 16% since the start of 2022. The thing is, investors shouldn't be so quick to write off Pfizer stock.
Shares of Meta Platforms (NASDAQ: META), Etsy (NASDAQ: ETSY), and Airbnb (NASDAQ: ABNB) were catching an afternoon breeze after Federal Reserve Chair Jerome Powell made dovish remarks in a speech today. As of 2:45 p.m. ET, the Nasdaq was up 2.9%, while Meta had gained 6.4%, Etsy was up 4.7%, and Airbnb was up 4.3%. Speaking at the Brookings Institution, Powell said that the central bank could slow the pace of rate increases at the next FOMC meeting on Dec. 13-14.
If bank assets are marked to market, the U.S. sector is insolvent, according to an independent analyst.
Standing here at the tail end of 2022, we can see the next year through the mist of uncertainty – and for now, that view is dominated by high inflation, rising interest rates and potential recession. Looking at the market situation, Goldman Sachs strategist Christian Mueller-Glissmann writes: "We remain defensive for the 3-month horizon with further headwinds from rising real yields and lingering growth uncertainty… The growth/inflation mix remains unfavorable – inflation is likely to normaliz
Shares of Nvidia (NASDAQ: NVDA) look set to end 2022 on a high — the stock is up 20% in the past month, and the company's latest results seem to give Wall Street hope that its fortunes could turn around in 2023. The segment's revenue increased 31% year over year to $3.8 billion, accounting for 64% of the company's top line.
Shares of Horizon Therapeutics (NASDAQ: HZNP) were skyrocketing 27.2% higher as of 10:48 a.m. ET on Wednesday. The big jump came after the company announced Thursday evening that it's in discussions with Amgen (NASDAQ: AMGN), Johnson & Johnson (NYSE: JNJ) subsidiary Janssen, and Sanofi (NASDAQ: SNY) about potentially being acquired. There were two words in Horizon's press release that investors should note: "highly preliminary."
The growing global adoption of electric vehicles is expected to boost EV charging stocks. ChargePoint earnings are due.
(Bloomberg) — One trader spent about $36 million on a bullish options wager tied to the S&P 500’s level over the next month, a trade that got a major boost when stocks surged Wednesday.Most Read from BloombergScientists Revive 48,500-Year-Old ‘Zombie Virus’ Buried in IceAn Arizona County’s Refusal to Certify Election Results Could Cost GOP a House SeatStock Traders Cheer Powell’s Risk-Friendly Shift: Markets WrapNYC Becomes One Billionaire Family’s Haven From China Property CrashThese Are the B
Cathie Wood and Warren Buffett have extremely different approaches when it comes to investing. While Wood tends to invest in high-flying growth stocks, Buffett is usually seen as a value investor who also loves companies that return capital to shareholders. Buffett has said in the past that he wouldn't buy all of the Bitcoin in the world for $25.
Yahoo Finance Live's Seana Smith checks out several stocks trending in the after-hours trading session.