Oxxo Owner FEMSA Nears a Record High While Its Core Profit Falls 36%

3 Key Points

—FEMSA (NYSE: FMX; BMV: FEMSAUBD), the Monterrey group behind Latin America's largest convenience chain Oxxo and the world's biggest Coca-Cola bottler, reported quarterly revenue of Ps.207.8 billion ($11.9B), up 6.1% — and a headline net profit of Ps.17.6 billion ($1.0B) that nearly doubled, but only because of a one-off gain from the BradyPLUS–Imperial Dade merger.

—Strip the windfall and the core earned Ps.5.7 billion ($326M), DOWN 36.4% year over year — while the crown jewel kept shining: Oxxo Mexico grew revenue 8.3% to Ps.74.4 billion ($4.3B), expanded operating profit 20.9% with an 80-basis-point margin gain, and added 158 stores to reach 24,455.

—The stock has priced the jewel and forgiven the rest: at $129.49 the ADR sits just under its all-time-high zone of $132.67 — up 67% from the 52-week low — trading at 28.6x earnings with the consensus target ($129.06) EXACTLY at the price: thirteen analysts collectively saying 'fully valued'.

FEMSA Results: What Happened