America Movil, S.A.B. de C.V. AMX reported impressive second-quarter 2021 results, wherein both the bottom line and the top line surpassed their respective Zacks Consensus Estimate.

Despite significant economic recovery in the United States, signs of higher inflation toward the latter part of the second quarter led to uncertainty across financial markets.

In fact, inflation rates surged across various Latin American countries, thereby forcing some central banks, particularly in Mexico and Brazil, to raise interest rates. This, in turn, resulted in increased foreign exchange volatility.

Bottom Line

Net income in the June quarter was Mex$42,816 million or Mex$0.65 per share compared with Mex$19,500 million or Mex$0.30 per share in the year-ago quarter. The year-over-year improvement was mainly driven by solid EBITDA growth and net comprehensive financing income.

The company had a comprehensive financing income of MxP17.2 billion against the year-earlier quarter’s comprehensive financing cost of MxP11.7 billion. The income was driven by foreign exchange gains.

Quarterly net income per ADR came in at 64 cents compared with 26 cents in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 32 cents.

America Movil, S.A.B. de C.V. Price, Consensus and EPS Surprise

America Movil, S.A.B. de C.V. price-consensus-eps-surprise-chart | America Movil, S.A.B. de C.V. Quote

Revenues

Driven by strong demand for broadband services, quarterly total revenues inched up 0.4% to MxP252,507 million ($12,603.4 million), accompanied with higher equipment revenues. However, it was partly offset by lower service revenues.

Service revenues were MxP209,466 million ($10,455.1 million), down 4.6% year over year. Equipment revenues totaled MxP41,137 million ($2,053.3 million), up 34%. The top line, too, surpassed the consensus estimate of $12,162 million.

America Movil ended the quarter with 80.5 million revenue generating units, 128,000 broadband accesses on the fixed-line platform and added 4.2 million wireless subscribers. Brazil, Argentina, Mexico and Colombia were the primary contributors.

The telco operates in multiple regions, namely — Mexico, Argentina, Brazil, Colombia, Chile, Ecuador, Peru, Central America, Caribbean and United States. Out of these, Peru witnessed year-over-year revenue growth of 43.8% to 1,493 million soles ($391.8 million). The robust performance was driven by higher service and equipment revenues.

Argentina’s revenues plunged 7.2% to ARS 35,820 million ($381.3 million), owing to declining service revenues. Revenues of its subsidiary, A1 Telekom Austria Group, increased 6.4% to €1,166 million ($1,404.6 million), driven by service and equipment revenue growth.

Other Quarterly Details

Total expenses were MxP167,560 million, down 0.8% from MxP168,935 million recorded in the year-ago quarter. Overall, EBITDA improved 2.8% from the prior-year quarter to MxP84,947 million. The EBITDA margin came in at 33.6% compared with 32.9% in the year-earlier quarter on the back of strong performance across all markets and foreign exchange gains.

Liquidity

As of Jun 30, 2021, America Movil had MxP100,140 million ($5,040.7 million) in cash, marketable securities and other short-term investments, with MxP470,360 million ($23,676.5 million) of long-term debt.

Zacks Rank & Stocks to Consider

America Movil currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader industry are Cogent Communications Holdings, Inc. CCOI, Ooma, Inc. OOMA and SeaChange International, Inc. SEAC. While Cogent sports a Zacks Rank #1 (Strong Buy), Ooma and SeaChange International carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cogent delivered a trailing four-quarter earnings surprise of 29%, on average.

Ooma delivered a trailing four-quarter earnings surprise of 65.5%, on average.

SeaChange International delivered a trailing four-quarter earnings surprise of 12.2%, on average.

Conversion rate used:

MxP1 = $0.049913 (period average from Apr 1, 2021 to Jun 30, 2021)

MxP1 = $0.050337 (as of Jun 30, 2021)

1 Peruvian Sol = $0.262426 (period average from Apr 1, 2021 to Jun 30, 2021)

1 Argentine Peso = $0.010644 (period average from Apr 1, 2021 to Jun 30, 2021)

€1 = $1.204663 (period average from Apr 1, 2021 to Jun 30, 2021)

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