It's been a great afternoon session for América Móvil investors, who saw their shares rise 2.1% to a price of $17.32 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
América Móvil Is Fairly Priced:
América Móvil, S.A.B. de C. The company belongs to the Telecommunications sector, which has an average price to earnings (P/E) ratio of 22.69 and an average price to book (P/B) ratio of 1.97. In contrast, América Móvil has a trailing 12 month P/E ratio of 16.8 and a P/B ratio of 3.16.
P/E rations can be placed into context by dividing them by the firm's expected 5-year EPS growth rate, which gives us its Price to Earnings Growth (PEG) ratio. América Móvil's PEG ratio is 1.02, which tells us the company is fairly valued in terms of growth. PEG ratios under 1 are considered an indicator of undervalued growth, but we need to keep in mind that many successful companies with excellent share performance have maintained much higher PEG ratios.
As always, a quantitative approach to a stock should be supplemented with a look at qualitative factors, such as the competence of its management team, quality of its corporate culture, and the wide variety of social and economic factors that can impact the success of its product.
Wider Gross Margins Than the Industry Average of 38.92%:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $52,747 | $53,454 | $50,975 | $41,564 | $43,499 | $48,303 |
| Gross Margins | 51% | 53% | 54% | 60% | 61% | 61% |
| Net Margins | 5% | 7% | 5% | 23% | 10% | 10% |
| Net Income (M) | $2,770 | $3,731 | $2,559 | $9,538 | $4,198 | $4,782 |
| Net Interest Expense (M) | $1,614 | $2,012 | $1,938 | $1,750 | $2,125 | $2,637 |
| Depreciation & Amort. (M) | $7,911 | $8,433 | $8,233 | $7,901 | $8,171 | $8,985 |
| Diluted Shares (M) | 66,056 | 66,005 | 66,862 | 0 | 63,325 | 63,224 |
| Earnings Per Share | $0.04 | $0.05 | $0.04 | $0.05 | $0.07 | $0.08 |
| Free Cash Flow (M) | $12,617 | $12,431 | $14,079 | $12,543 | $11,605 | $14,686 |
| Total Debt (M) | $27,577 | $26,278 | $24,084 | $20,354 | $21,050 | $20,119 |
| Net Debt / EBITDA | 1.76 | 1.52 | 1.35 | 1.15 | 1.12 | 0.98 |
| Current Ratio | 0.75 | 0.63 | 0.71 | 0.76 | 0.74 | 0.65 |
