FEMSA (FMX) Benefits From Growth Initiatives: Stock to Gain

About this update from Fomento Economico Mexicano Sab De Cv Units Cons. Of 5 Shsb

Fomento Economico Mexicano S.A.B. de C.V. FMX alias, FEMSA, has been in a good spot, courtesy of its robust strategic initiatives. FEMSA has been witnessing solid growth trends across all business units, owing to effective strategies and strong market demand. The company’s efforts to expand in the U.S. specialized distribution segment bode well.FMX's digital initiatives, business expansion endeavors and continued strength in OXXO Mexico and OXXO Gas have also been aiding results. Moreover, it displays solid financial flexibility.FEMSA’s adjusted net majority earnings per ADS benefited from robust sales growth, improved gross margin and lower interest expenses. On an organic basis, total revenues rose 4.3% year over year. Gains across its business units drove revenue growth.Shares of this Zacks Rank #3 (Hold) company have rallied 35.1% in the past year compared with the industry’s growth of 5.1%. The sector witnessed a decline of 2.8% in the same time frame. Also, it came ahead of S&P 500’s 28.3% rise.The Zacks Consensus Estimate for FMX’s current financial-year sales and earnings indicates growth of 4.2% and 0.9%, respectively, from the year-ago reported numbers.However, it witnessed a decline in operating margin due to contraction at Proximity Americas, Health and Fuel divisions. This was on account of higher labor expenses related to labor reforms in Mexico and the inclusion of Proximity Europe.Factors Driving GrowthFMX has been gaining pace in the digital space through its tech and innovation business unit, Digital@FEMSA, which is focused on building a value-added digital and financial ecosystem for end customers and businesses. It also aims to enable and leverage the strategic assets of FEMSA’s core business verticals.Its Coca-Cola FEMSA is leading the way with its omni-channel business, while the Proximity division is progressing with the adoption of digital initiatives for OXXO stores. Within its OXXO store chains, the company is on track with investing in digital offerings, loyalty programs and fintech platforms to evolve stronger over the long term.Its OXXO digital wallet, OXXO Premia, and loyalty program have been performing well. The company made progress on its digital efforts, with continued addition of Spin Premia and Spin by OXXO customers at an accelerated pace. Spin by OXXO received its definitive authorization to operate as a fintech in M...

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