Why America Movil (AMX) Stock Closed Higher On Friday

NEW YORK (TheStreet) --Shares of America Movil SAB de CV (AMX) finished up 5.03% to $20.68 on heavy volume this afternoon, following CEO Carlos Slim's decision to buy out AT&T's (T) $5.9 billion stake in the company, Bloomberg reports.

AT&T owns an 8.3% stake in the Mexico-based wireless communications service company, which includes 24% of America Movil's voting shares, and is selling due to its purchase of Direct-TV (DTV), America Movil's pay-TV competitor in Latin America.

Slim's holding company, Inmobiliaria Carso (IBYNF), will acquire AT&T's stake, but it didn't disclose how much it would pay, Bloomberg added.

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Separately, 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 expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and relatively poor performance when compared with the S&P 500 during the past year."

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

  • The gross profit margin for AMERICA MOVIL SA DE CV is rather high; currently it is at 54.70%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, AMX's net profit margin of 7.10% significantly trails the industry average.
  • AMX, with its decline in revenue, slightly underperformed the industry average of 2.5%. Since the same quarter one year prior, revenues slightly dropped by 4.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness 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.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Wireless Telecommunication Services industry. The net income has significantly decreased by 51.3% when compared to the same quarter one year ago, falling from $2,181.87 million to $1,063.63 million.
  • The debt-to-equity ratio is very high at 2.38 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 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: AMX Ratings Report
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