Skip to Content

Fomento Economico Mexicano SAB de CV ADR FMX

Rating as of

Morningstar’s Analysis

Valuation
Currency in USD
Is it the right time to buy or sell?
Find out with Morningstar Premium
Is it the right time to buy or sell?
Find out with Morningstar Premium

1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Pandemic Rebound on Full Display at Femsa in Q2, but Horizon Still Uncertain; Shares Fairly Valued

Analyst Note

| Nicholas Johnson, CFA |

With narrow-moat Femsa’s largest constituent having already reported heading into its second-quarter earnings, we think investors were zeroing in on (1) the comparable sales trajectory of the proximity business, particularly on a two-year stacked basis, and (2) the outlook for a broader macro recovery across its key territories. The results were laudable, ahead of our expectations on both the top and bottom lines, but the near-term outlook is still uncertain, particularly as coronavirus-induced mobility constraints continue to linger in some countries and the scope of inoculation campaigns remains challenged. We plan to raise our $88 per ADR fair value estimate by a mid-single-digit percentage to reflect time value and strong commercial momentum at Oxxo. The shares have been on a nice run, and while they’re still marginally undervalued relative to our admittedly conservative fair value, we’d still suggest prospective investors wait for a more attractive entry point.

Read Full Analysis

Company Profile

Business Description

Femsa is a holding company with controlling interests in three entities: It owns a 47% economic and 56% voting interest in Coca-Cola Femsa, while wholly owning Femsa Comercio and CB Equity. CB Equity houses a roughly 15% stake in Heineken, while Comercio operates through three business units: proximity, which houses Oxxo, the largest small-format chain in the Americas, with convenience stores in Mexico and South America (including Brazil through a joint venture with Raizen); health, which operates pharmacies across a geographic footprint similar to Oxxo; and fuel, which operates retail service stations under franchisee arrangements in Mexico. Femsa also controls several other tangential businesses in the U.S., including logistics services and specialized distributors like WAXIE.

Contact
General Anaya No. 601 Pte., Colonia Bella Vista
Monterrey, NL, 64410, Mexico
T +52 8183286000
Sector Consumer Defensive
Industry Beverages - Brewers
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type
Employees 320,000

Related

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.