Rating Change #2
America Movil S.A.B. De C.V. (AMX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and a generally disappointing performance in the stock itself.
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Highlights from the ratings report include:
- AMX's very impressive revenue growth greatly exceeded the industry average of 4.5%. Since the same quarter one year prior, revenues leaped by 99.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Wireless Telecommunication Services industry and the overall market, AMERICA MOVIL SA DE CV's return on equity significantly exceeds that of both the industry average and the S&P 500.
- AMERICA MOVIL SA DE CV reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AMERICA MOVIL SA DE CV reported lower earnings of $1.51 versus $1.90 in the prior year. This year, the market expects an improvement in earnings ($2.03 versus $1.51).
- In its most recent trading session, AMX has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
- The debt-to-equity ratio of 1.36 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, AMX has a quick ratio of 0.66, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
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