Amer Movil (AMX) Up 8.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Amer Movil (AMX). Shares have added about 8.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amer Movil due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
America Movil Q3 Earnings Fall Y/Y
America Movil reported net income per ADR of 4 cents for third-quarter 2023, down from 28 cents reported in the prior-year quarter.
Net income in the quarter was Mex$2,028 million or Mex$0.03 per share compared with Mex$17,969 million or Mex$0.28 per share in the year-ago quarter.
The company had a comprehensive financing cost of Mex$29,740 million, up 83.1% from the year-ago quarter’s comprehensive financing costs of Mex$16,238 million.
Revenues
Total quarterly revenues decreased 3.3% to Mex$203,842 million due to poor performance in the Service and Equipment business segments. Also, rising interest rate and unfavorable foreign currency movement were headwinds.
Service revenues were Mex$169,052 million, down 4.3% year over year. Equipment revenues totaled Mex$31,105 million, down 2.6%.
America Movil gained 3 million wireless subscribers in the third quarter. This figure includes 2 million postpaid subscribers. Brazil, Austria and Colombia were the primary contributors to postpaid subscriber growth. The company had 306.2 million wireless subscribers at the third-quarter end.
On the fixed-line, Broadband and Television platforms, the company ended the quarter with 73.4 million revenue-generating units.
The telco operates in multiple regions, namely Mexico, Brazil, Colombia, Peru, Ecuador, Argentina, Central America, the Caribbean, Austria and Other European countries.
Of these countries, Peru witnessed a year-over-year revenue rise of 2.5% to 1,624 million Soles. The uptick was driven by higher service revenues.
Argentina’s revenues came in at ARS 145,053 million, down 7.7% from the year-ago quarter. The downside was caused by declining service and wireless revenues. The reported data for Argentina are presented in line with IAS29, reflecting the implications of inflationary accounting, as the Argentinean economy is projected to be hyperinflationary for the third quarter of 2023. The company also stated that Argentina would be left out of all comparisons for consolidated data at constant exchange rates to maintain consistency.
Colombia’s revenues increased 1.3% to COP 3,739 billion, owing to an increase in fixed-line revenues.
Revenues from Mexico, Brazil, Central America, Austria and Other European regions witnessed year-over-year growth of 7.5%, 6.4%, 5.5%, 0.3%, and 5.4%, respectively. Revenues from the Caribbean and Ecuador declined 1% and 0.6%, respectively.
Other Quarterly Details
Total costs and expenses were Mex$123,947 million, down 3.1% from the year-ago quarter. Overall, EBITDA decreased 3.6% from the prior-year quarter to Mex$79,896 million. The EBITDA margin came in at 39.2% compared with 39.3% in the year-ago quarter. The company’s operating profit decreased 6.7% to Mex$41,543 million.
Liquidity
As of Sep 30, 2023, America Movil had Mex$102,788 million in cash, marketable securities and other short-term investments with Mex$354,122 million of long-term debt.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Amer Movil has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Amer Movil has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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