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FEMSA's (FMX) Q1 Earnings and Revenues Surpass Estimates
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Fomento Economico Mexicano S.A.B. de C.V. (FMX - Free Report) , alias FEMSA, reported first-quarter 2023 net majority earnings per ADS of $7.44 (Ps. 13.44 per FEMSA unit), surpassing the Zacks Consensus Estimate of 76 cents.
Net consolidated income was Ps. 50,329 million (US$2,691.4 million), reflecting a significant increase from Ps. 5,848 million (US$285 million) in the year-ago quarter.
Total revenues were $9,645 million (Ps. 180,011 million), which improved 21.9% year over year in the local currency. Revenues, in U.S. dollar, surpassed the Zacks Consensus Estimate of $9,614 million. Revenue growth was driven by gains across most business units. On an organic basis, total revenues rose 12.4%.
Shares of this Zacks Rank #3 (Hold) company have rallied 13.8% in the past three months compared with the industry’s growth of 9.1%.
Image Source: Zacks Investment Research
FEMSA’s gross profit rose 23% year over year to Ps. 67,013 million (US$3,583.6 million). The consolidated gross margin increased 30 basis points (bps) to 37.2%, owing to the gross margin expansion across most of its business units. The gross margin expanded 50 bps at Health division, 10 bps at Fuel operations and 30 bps at Coca-Cola FEMSA S.A.B. de C.V. (KOF - Free Report) . However, it contracted 80 bps at Proximity and 10 bps at Envoy Solutions.
FEMSA’s operating income (income from operations) was up 5.5% year over year to Ps. 12,543 million (US$670.7 million). On an organic basis, operating income improved 3.3%. The consolidated operating margin contracted 110 bps to 7% due to margin contractions at Proximity, Health and Envoy Solutions divisions, offset by margin expansions at the Fuel and Coca-Cola FEMSA Divisions.
Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS Surprise
Proximity Division: Total revenues for the segment rose 21.9% year over year to Ps. 60,871 million (US$3,255.1 million). Organic revenues improved 21.2%. The increase can primarily be attributed to an 18.3% rise in same-store sales on 5.7% growth in store traffic and an 11.9% increase in average ticket. The Proximity division had 21,615 OXXO stores as of Mar 31, 2023. Operating income accelerated 19.7% year over year. The operating margin for the segment declined 20 bps to 7.3%, owing to higher operating expenses.
Fuel Division: Total revenues rose 20.6% to Ps. 13,141 million (US$702.7 million). Average same-station sales improved 17.4%, driven by an 11.6% increase in the average volume and 5.2% growth in the average price per liter. Results also gained from volume growth in its institutional and wholesale customer network. The company had 570 OXXO GAS service stations as of Mar 31, 2023. Operating income advanced 38.7% and the operating margin expanded 50 bps to 4%.
Health Division: The segment reported total revenues of Ps. 18,574 million (US$993.3 million), down 0.4% year over year. Revenues benefited from favorable trends across Colombia and Ecuador, offset by an unfavorable comparison base in Chile and Mexico, as well as negative currency translations. On a currency-neutral basis, total revenues increased 14.1%, whereas same-store sales increased 5.8%. The segment had 4,186 points of sales across all regions as of Mar 31, 2023. The operating income declined 6.1% year over year, while the operating margin contracted 30 bps to 5.4%.
Envoy Solutions: Total revenues for the segment were Ps. 13,467 million (US$720.2 million), up 23.7% year over year. Revenues reflected positive demand trends across several categories in the United States, including effective cross-selling initiatives, as well as recent acquisitions. The segment’s operating income declined 10% and the operating margin contracted 140 bps to 3.6%. Organic operating income increased 1.2%.
Coca-Cola FEMSA: Total revenues for the segment advanced 12% year over year to Ps. 57,357 million (US$3,067.2 million). KOF’s revenues were mainly aided by improved volume across regions, driven by strong performance in Mexico, Brazil and Guatemela. Revenue management initiatives and favorable mix effects also aided revenues.
On a comparable basis, Coca-Cola FEMSA’s revenues improved 21.7% year over year. KOF’s consolidated operating income increased 12.9% and comparable operating income rose 20.3%. The segment’s operating margin expanded 10 bps to 21.8%.
Financial Position
FEMSA had cash and cash equivalents of Ps. 99,927 million (US$5,517.8 million) as of Mar 31, 2023. Long-term debt was Ps. 138,485 million (US$7,646.9 million). The company incurred a capital expenditure of Ps. 5,080 million (US$271.7 million) in the first quarter, reflecting higher investments in most businesses.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Vita Coco Company (COCO - Free Report) and The Duckhorn Portfolio (NAPA - Free Report) .
Vita Coco currently carries a Zacks Rank #2 (Buy). COCO has a trailing four-quarter earnings surprise of 21.6%, on average. The company has rallied 58.1% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vita Coco’s current financial year sales and earnings per share suggests growth of 10% and 178.3%, respectively, from the year-ago quarter’s reported figure. The consensus mark for COCO’s earnings has been unchanged in the past 30 days.
Duckhorn currently has a Zacks Rank of 2. NAPA has a trailing four-quarter earnings surprise of 13.5%, on average. It has a long-term earnings growth rate of 6.6%. The company has declined 8.4% in the past three months.
The Zacks Consensus Estimate for Duckhorn’s current financial year sales and earnings per share suggests growth of 8.4% and 1.6%, respectively, from the prior-year reported numbers. The consensus mark for NAPA’s earnings per share has been unchanged in the past 30 days.
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FEMSA's (FMX) Q1 Earnings and Revenues Surpass Estimates
Fomento Economico Mexicano S.A.B. de C.V. (FMX - Free Report) , alias FEMSA, reported first-quarter 2023 net majority earnings per ADS of $7.44 (Ps. 13.44 per FEMSA unit), surpassing the Zacks Consensus Estimate of 76 cents.
Net consolidated income was Ps. 50,329 million (US$2,691.4 million), reflecting a significant increase from Ps. 5,848 million (US$285 million) in the year-ago quarter.
Total revenues were $9,645 million (Ps. 180,011 million), which improved 21.9% year over year in the local currency. Revenues, in U.S. dollar, surpassed the Zacks Consensus Estimate of $9,614 million. Revenue growth was driven by gains across most business units. On an organic basis, total revenues rose 12.4%.
Shares of this Zacks Rank #3 (Hold) company have rallied 13.8% in the past three months compared with the industry’s growth of 9.1%.
Image Source: Zacks Investment Research
FEMSA’s gross profit rose 23% year over year to Ps. 67,013 million (US$3,583.6 million). The consolidated gross margin increased 30 basis points (bps) to 37.2%, owing to the gross margin expansion across most of its business units. The gross margin expanded 50 bps at Health division, 10 bps at Fuel operations and 30 bps at Coca-Cola FEMSA S.A.B. de C.V. (KOF - Free Report) . However, it contracted 80 bps at Proximity and 10 bps at Envoy Solutions.
FEMSA’s operating income (income from operations) was up 5.5% year over year to Ps. 12,543 million (US$670.7 million). On an organic basis, operating income improved 3.3%. The consolidated operating margin contracted 110 bps to 7% due to margin contractions at Proximity, Health and Envoy Solutions divisions, offset by margin expansions at the Fuel and Coca-Cola FEMSA Divisions.
Fomento Economico Mexicano S.A.B. de C.V. Price, Consensus and EPS Surprise
Fomento Economico Mexicano S.A.B. de C.V. price-consensus-eps-surprise-chart | Fomento Economico Mexicano S.A.B. de C.V. Quote
Segmental Discussion
Proximity Division: Total revenues for the segment rose 21.9% year over year to Ps. 60,871 million (US$3,255.1 million). Organic revenues improved 21.2%. The increase can primarily be attributed to an 18.3% rise in same-store sales on 5.7% growth in store traffic and an 11.9% increase in average ticket. The Proximity division had 21,615 OXXO stores as of Mar 31, 2023. Operating income accelerated 19.7% year over year. The operating margin for the segment declined 20 bps to 7.3%, owing to higher operating expenses.
Fuel Division: Total revenues rose 20.6% to Ps. 13,141 million (US$702.7 million). Average same-station sales improved 17.4%, driven by an 11.6% increase in the average volume and 5.2% growth in the average price per liter. Results also gained from volume growth in its institutional and wholesale customer network. The company had 570 OXXO GAS service stations as of Mar 31, 2023. Operating income advanced 38.7% and the operating margin expanded 50 bps to 4%.
Health Division: The segment reported total revenues of Ps. 18,574 million (US$993.3 million), down 0.4% year over year. Revenues benefited from favorable trends across Colombia and Ecuador, offset by an unfavorable comparison base in Chile and Mexico, as well as negative currency translations. On a currency-neutral basis, total revenues increased 14.1%, whereas same-store sales increased 5.8%. The segment had 4,186 points of sales across all regions as of Mar 31, 2023. The operating income declined 6.1% year over year, while the operating margin contracted 30 bps to 5.4%.
Envoy Solutions: Total revenues for the segment were Ps. 13,467 million (US$720.2 million), up 23.7% year over year. Revenues reflected positive demand trends across several categories in the United States, including effective cross-selling initiatives, as well as recent acquisitions. The segment’s operating income declined 10% and the operating margin contracted 140 bps to 3.6%. Organic operating income increased 1.2%.
Coca-Cola FEMSA: Total revenues for the segment advanced 12% year over year to Ps. 57,357 million (US$3,067.2 million). KOF’s revenues were mainly aided by improved volume across regions, driven by strong performance in Mexico, Brazil and Guatemela. Revenue management initiatives and favorable mix effects also aided revenues.
On a comparable basis, Coca-Cola FEMSA’s revenues improved 21.7% year over year. KOF’s consolidated operating income increased 12.9% and comparable operating income rose 20.3%. The segment’s operating margin expanded 10 bps to 21.8%.
Financial Position
FEMSA had cash and cash equivalents of Ps. 99,927 million (US$5,517.8 million) as of Mar 31, 2023. Long-term debt was Ps. 138,485 million (US$7,646.9 million). The company incurred a capital expenditure of Ps. 5,080 million (US$271.7 million) in the first quarter, reflecting higher investments in most businesses.
Stocks to Consider
We highlighted some better-ranked stocks from the broader Consumer Staples space, namely Vita Coco Company (COCO - Free Report) and The Duckhorn Portfolio (NAPA - Free Report) .
Vita Coco currently carries a Zacks Rank #2 (Buy). COCO has a trailing four-quarter earnings surprise of 21.6%, on average. The company has rallied 58.1% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Vita Coco’s current financial year sales and earnings per share suggests growth of 10% and 178.3%, respectively, from the year-ago quarter’s reported figure. The consensus mark for COCO’s earnings has been unchanged in the past 30 days.
Duckhorn currently has a Zacks Rank of 2. NAPA has a trailing four-quarter earnings surprise of 13.5%, on average. It has a long-term earnings growth rate of 6.6%. The company has declined 8.4% in the past three months.
The Zacks Consensus Estimate for Duckhorn’s current financial year sales and earnings per share suggests growth of 8.4% and 1.6%, respectively, from the prior-year reported numbers. The consensus mark for NAPA’s earnings per share has been unchanged in the past 30 days.