NEW YORK (TheStreet) -- America Movil SAB de CV's (AMX) Carlos Slim is planning on investing more in South American countries while expanding his holdings in industries beyond telecommunications, as regulatory pressure in Mexico forced him to break up his phone business, Bloomberg reports.
Mexico's Congress is looking to pass a bill that would impose profit crushing penalties on industry dominant companies, as a result America Movil agreed to reduce its market share to below 50% by selling off some assets.
Slim is planning on refocusing his investments in order to take advantage of inexpensive borrowing costs.
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Slim already has holdings beyond Mexico and the telecommunications industry, Bloomberg added, but the 74-year old CEO is planning to spend more on energy, infrastructure, and real estate across Latin America, with particular interest in Brazil, Colombia, and Peru.
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 a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk."
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 2.4%. 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 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.
- 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