Mexican Billionaire Advises: Boost Latino Workers' Earning Power

By Juan A. Lozano

HOUSTON -- Increasing workers' earning power and offering Latino-owned companies easier access to funding that can be used for growth and expansion can help improve the social and economic status of Latinos in the U.S. and throughout Latin America, Mexican billionaire Carlos Slim told a group of religious and community leaders Sunday.

During a speech at the annual conference of the Catholic Association of Latino Leaders, Slim spoke for more than an hour on how to better the plight of Latino workers and Latino-owned businesses.

Slim, a telecom magnate who this year was ranked by Forbes magazine as the world's second-richest person, with an estimated net worth of $72 billion, suggested establishing investment firms or companies dedicated to working with small- and medium-size Latino businesses in need of financing.

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He told a crowd of about 200 people that in a time of recent economic crises, countries need to focus on strengthening the middle class as well as health care systems and education.

"What is important is that people earn more and that more middle classes are formed," said Slim, who owns telecommunications giant America Movil, (AMX) a leading cellphone service provider in Latin America.

Slim also reiterated an idea he first made public last month at another conference: his proposal for a three-day workweek. He said the idea would mean longer work hours and delaying retirement until a person is 70 to 75 years old. But he said it would mean people having more free time with their families or for personal enrichment.

Last week, Slim's foundation unveiled Acceso Latino, a free website created to provide U.S. Latinos easy access to tools and content about education, health care, job training, culture and other areas.

The growing importance of the Latino population can be seen in its rising numbers, Slim said. There are more than 53 million Hispanics living in the United States, which is about 17% of the nation's total population, according to U.S. census figures.

Slim said this figure makes the U.S. Hispanic population larger than the populations of many Latin American countries.

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Martin Cabrera, the CEO of a Chicago-based investment firm who attended the conference, said there are already multibillion-dollar pension funds that have investment arms that provide financing to start-ups and other companies.

"The amount of business they are doing with Latino [firms] is close to zero," he said.

Cabrera said Slim can use his influence and stature to develop a dialogue with these pension funds and their investment arms to get them to see the potential of investing in Latino-owned businesses.

Cabrera added that these funds and investment firms not only provide much needed money, but they also bring "management and experience to help" Latino-owned businesses grow and "get them to the next level and even possibly be the Latino Facebook or the Latino Google."

Now let's look at TheStreet Ratings' take on some of these stocks.

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

"We rate AMERICA MOVIL SA DE CV (AMX) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, growth in earnings per share, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:
  • AMX's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues rose by 10.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • 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 $1.56 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($1.81 versus $1.56).
  • The gross profit margin for AMERICA MOVIL SA DE CV is rather high; currently it is at 54.45%. Regardless of AMX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, AMX's net profit margin of 9.28% is significantly lower than the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. 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.
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