FEMSA Stock Declines 36% in a Year: Buy the Dip or Wait for Now?

Core Viewpoint - FEMSA's stock has declined by 35.7% over the past year, underperforming both the broader industry and the Consumer Staples sector, which saw dips of 6.7% and 4.4% respectively, while the S&P 500 increased by 23.6% during the same period [1]. Stock Performance - The current stock price of FMX is $83.59, which is a 41.7% discount from its 52-week high of $143.43 and reflects a 3.1% premium over its 52-week low [4]. - FMX shares are trading below their 50 and 200-day moving averages, indicating a bearish sentiment in the market [4]. Challenges Facing FEMSA - The company is experiencing a soft consumer environment, particularly in Mexico, leading to mixed sales trends in the Proximity Americas segment, which reported a year-over-year sales growth of 4.8% but flat same-store sales [5]. - Adverse weather conditions have negatively impacted key consumption occasions for OXXO, resulting in underperformance in beer, sparkling beverages, and water [6]. Strategic Initiatives - FEMSA is implementing the FEMSA Forward Strategy, focusing on long-term value creation across its core businesses, including retail and Coca-Cola FEMSA [8]. - The company is advancing in the digital space through its Digital@FEMSA unit, which aims to create a value-added digital and financial ecosystem [9]. Growth Opportunities - FEMSA's Proximity and Health retail businesses present significant long-term growth opportunities, with the company on track to accelerate earnings growth through organic expansion [11]. - The stock is trading at a forward 12-month price-to-earnings ratio of 15.55X, which is below its five-year high and the industry average, indicating attractive valuation for potential investors [12]. Investment Potential - The focus on digital expansion and the potential in retail businesses highlight the company's resilience in a dynamic market, although a soft consumer environment in Mexico may impact near-term results [13].