On Dec 8, shares of America Movil S.A.B. de C.V. AMX plunged to a 52-week low of $14.71 and eventually closed a little higher at $14.76. Regulatory issues in Mexico, adverse foreign exchange movement and intensifying competition continue to hurt the stock, leading to a negative year-to-date return of over 33%.
America Movil reported third-quarter 2015 loss per ADR (American Depository Receipt) of $0.05. In contrast, the Zacks Consensus Estimate of earnings was $0.24 per ADR. Notably, the company had last reported a loss in the fourth quarter of 2001.
The company’s results have been hurt by the adverse foreign exchange rate movement in several Latin American countries. During the third quarter, Mexican peso, Brazilian real and Colombian peso dropped a respective 7%, 21% and 18% sequentially with respect to the U.S. dollar.
Meanwhile, U.S. telecom behemoth AT&T, Inc.’s T entry into the Mexican telecom industry with the acquisition of Gurpo Iusacell and Nextel de Mexico has intensified competition, and is a major cause of concern for America Movil.
Moreover, AT&T’s acquisition of DIRECTV may further impact America Movil’s market position as DIRECTV is an existing competitor in Mexico and other Latin American countries.
Further, America Movil recently faced a major blow after Mexico’s telecom regulator Federal Telecommunications Institute (IFT) permitted access to the "last mile" of the company’s wireline division Telmex’s telephone networks to rivals.
Meanwhile, the company has been facing another IFT probe relating to a business agreement between Telmex and satellite TV operator Dish Mexico.
Also, downward estimate revisions reflect pessimism regarding the stock’s prospects. The Zacks Consensus Estimate for 2015 and 2016 moved south by 24.5% and 6.8% to 83 cents and $1.37 per share, respectively, over the last 60 days.
Currently, America Movil has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector are Fairpoint Communications, Inc. FRP and China Mobile Limited CHL. While Fairpoint Communications sports a Zacks Rank #1 (Strong Buy), China Mobile holds a Zacks Rank #2 (Buy).
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