Why America Movil (AMX) Stock Is Down Today

NEW YORK (TheStreet) -- America Movil (AMX) was falling 4.2% to $19.58 on news that AT&T (T) will divest its interest in the company.

AT&T will divest its interest in America Movil to help facilitate the regulatory approval of its acquisition of DirecTV (DTV). The American telecom will divest its 73 million L shares of America Movil, and all of its AA shares. America Movil board members designated by AT&T will also resign from the board immediately to avoid any possible conflict of interest.

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TheStreet Ratings team rates AMERICA MOVIL SA DE CV as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMERICA MOVIL SA DE CV (AMX) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AMX's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 5.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. 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 has improved earnings per share by 23.3% 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 $1.55 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.55).
  • The debt-to-equity ratio is very high at 2.35 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. 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.
  • 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. Looking ahead, other than the push or pull of the broad market, we do not see anything in the company's numbers that may help reverse the decline experienced over the past 12 months. Despite the past decline, the stock is still selling for more than most others in its industry.
  • You can view the full analysis from the report here: AMX Ratings Report

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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