Will FEMSA (FMX) Beat on Q3 Earnings Despite Cost Woes?
Fomento Economico Mexicano, S.A.B. de C.V. FMX, or FEMSA, is slated to report third-quarter 2023 earnings on Oct 27. The company is likely to have witnessed top-line growth in the quarter under review.
The Zacks Consensus Estimate for FMX’s third-quarter earnings of $1.16 per share suggests 22.2% growth from the year-ago quarter’s reported figure. The consensus estimate for earnings has been unchanged in the past 30 days. The consensus mark for quarterly revenues is pegged at $11.2 billion, indicating growth of 32.2% from the year-ago quarter's reported figure.
In the last reported quarter, the company delivered an earnings surprise of 35.5%. It has a trailing four-quarter earnings surprise of 6.1%, on average.
Fomento Economico Mexicano S.A.B. de C.V. Price and EPS Surprise
Fomento Economico Mexicano S.A.B. de C.V. price-eps-surprise | Fomento Economico Mexicano S.A.B. de C.V. Quote
Factors at Play
FEMSA has been witnessing robust trends from growth across all business units, owing to effective growth strategies and robust market demand. The company is also well-placed for growth through investments in digital and technology-driven initiatives, and continued strength in OXXO Mexico and OXXO Gas. FMX’s solid growth prospects, driven by its strategy of creating a distribution platform in the United States, bode well.
FEMSA has been gaining pace in the digital space through its tech and innovation business unit — Digital@FEMSA. The unit has been focused on building a value-added digital and financial ecosystem for end customers and businesses. It has also been inclined toward enabling and leveraging the strategic assets of FEMSA’s core business verticals. Gains from these initiatives are expected to get reflected in the company’s third-quarter results.
FMX has been on track with its strategy of creating a distribution platform in the United States through the expansion of its footprint in the specialized distribution industry. The company’s 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. These efforts are expected to have contributed to its top-line performance in the to-be-reported quarter.
The company’s Coca-Cola FEMSA has been leading the way with its omnichannel business, whereas FEMSA Comercio has been progressing with the adoption of digital initiatives. Investments in digital offerings, loyalty programs and fintech platforms bode well. Its OXXO digital wallet, OXXO Premia and loyalty program have also been performing well. Such endeavors are likely to have aided revenues in the to-be-reported quarter.
We expect revenues for the Proximity Americas division to increase 10.1% year over year in the third quarter, backed by gains in the OXXO retail business. Revenues for the Fuel, Health and Coca-Cola FEMSA businesses are expected to increase 1.4%, 4.7% and 5.8%, respectively, in the to-be-reported quarter.
However, the company has been witnessing margin pressures, which are expected to have continued in the third quarter. FEMSA’s performance is expected to have been partly hurt by the impacts of supply-chain disruptions and higher raw material costs. Inflation in steel and aluminum prices is expected to have been concerning.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for FEMSA this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
FEMSA has an Earnings ESP of 0.00% and a Zacks Rank #5 (Strong Sell).
Stocks Poised to Beat Earnings Estimates
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to deliver an earnings beat.
Keurig Dr Pepper KDP currently has an Earnings ESP of +0.63% and a Zacks Rank #3. The company is expected to register year-over-year top and bottom-line growth when it reports third-quarter 2023 results. The Zacks Consensus Estimate for KDP’s quarterly revenues is pegged at $3.78 billion, calling for growth of 4.2% from the figure reported in the prior-year quarter.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Keurig Dr Pepper’s quarterly EPS is pegged at 47 cents, indicating an improvement of 2.2% from the year-ago quarter’s actual. KDP recorded an earnings surprise of 1.5% in the last reported quarter.
The Boston Beer Company SAM currently has an Earnings ESP of +0.17% and a Zacks Rank #3. The company’s bottom line is expected to increase year over year when it reports third-quarter results. The Zacks Consensus Estimate for SAM’s quarterly revenues is pegged at $592.9 million, suggesting a decline of 0.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Boston Beer’s quarterly EPS is pegged at $4.25, which indicates 11.3% growth from the year-ago period figure. SAM has a trailing four-quarter negative earnings surprise of 74.9%, on average.
Molson Coors TAP currently has an Earnings ESP of +0.89% and a Zacks Rank #3. TAP is likely to register top and bottom-line year over year growth when it reports the third-quarter 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.25 billion, which suggests growth of 10.6% from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for Molson Coors’ quarterly earnings is pegged at $1.52 per share, suggesting an increase of 15.2% from the year-ago quarter’s reported number. TAP has delivered an earnings beat of 34.2%, on average, in the trailing four quarters.
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Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report
Molson Coors Beverage Company (TAP) : Free Stock Analysis Report
The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report
Keurig Dr Pepper, Inc (KDP) : Free Stock Analysis Report
