Currencies can wreak havoc on a stock. America Movil (NYSE:AMX) has been clobbered by the weak peso and stronger dollar and real. Small wonder. AMX must bring its earnings from all over the Western Hemisphere back to Mexico. The peso hasn't been worth much going from 10 pesos/dollar in August to 15.41 on March 2nd.
The Brazilian real gained 10% against the peso from October to March. Last quarter, AMX had a more than decent quarter piling on 10 million new subscribers. Most of those customers came outside of Mexico. Three million, for instance, from Brazil. The earnings though got gored by forex losses. That quarter AMX took a 14 billion peso foreign exchange loss. Even with that hit, the company managed a net income rise of 14.5% and EPS increase over 19%. Unfortunately, the strong dollar exacted a further blow dropping ADR EPS 1.8%.
The trajectory of the peso has begun to reverse. The left for dead peso has been coming back against the dollar and other currencies. It's even been strengthening against the Brazilian Real, something equally surprising.
AMX had been devastated by Mexican currency woes and should benefit from the peso's resurgence. The peso appears to be gaining traction against the real and dollar, something that should result in a strong showing for AMX as 2009 goes on.
Disclosure: long AMX, no position FXM