Will America Movil (AMX) Disappoint Investors In Q4 Earnings?
Zacks Investment Research | Feb 11, 2018 08:55PM ET
America Movil (NYSE:AMX) is scheduled to release fourth-quarter 2017 results on Feb 13, after the market closes.
The company portrays a negative earnings surprise history. Earnings lagged the Zacks Consensus Estimate in two of the previous four quarters, with an average miss of 29.17%
Let’s see how things are shaping up prior to this announcement.
Factors Likely to Influence Q4 Earnings
America Movil’s efforts to systematically enrich spectrum portfolio with the acquisition of wireless spectrums instill optimism. The acquisition of 60 MHz of wireless spectrum (airwave) in the 2.5 GHz band from Grupo MVS (in July 2017) has enhanced the company’s high-speed data service. Last year, the company gained additional spectrums in Uruguay and Costa Rica. Moreover, the wireless roaming agreement with U.S. telecom giant AT&T (NYSE:T) should help the company retain position in the Mexican market. Meanwhile, regulatory approval from Argentina's National Communications Agency (Enacom) to enter into the pay-TV market in Argentina is a major positive for the company. Notably, the company has already established wireless and wireline operators in Argentina. Joint venture with JCDecaux should boost the company’s out-of-home advertising businesses.
On the flip side, America Movil’s aggressive promotional strategies (like discounts and subsidized offers), aimed to increase penetration in the smartphone market, are concerns. These efforts may cause decline in margins with increased cost and expenses, affecting overall profits in the near term.
America Movil’s second-largest wireless market — Brazil — has become increasingly competitive. The company’s Brazilian operation (Claro) faces competitive threat from Vivo, owned by Telefonica (MC:TEF) Brazil SA (NYSE:VIV) . Meanwhile, AT&T’s entry into the Mexican telecom industry with the acquisition of Gurpo Iusacell and Nextel de Mexico pose severe competition for the company. To this end, the company’s focus on shifting base from Mexico to Brazil in the wake of declining quarterly revenues looks viable.
Accumulating debt and decreasing cash flows may pose problems for the company’s credit ratings.
Price Performance
America Movil portrays an impressive price performance. In the past three months, the stock has rallied 2.9% against the Original post
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