America Movil: Capitalize on the Growing Latin American Wireless Market

Apr.16.07 | About: America Movil (AMX)

America Movil (NYSE:AMX) is the largest provider of wireless communications in Latin America. The mobile giant had over 93 million subscribers in 14 different countries as of last December. Latin America has experienced large growth over the past five years, thanks in large part to Brazil’s surging incomes. And America Movil will be there to pick up those extra consumer spending dollars.

Key America Movil Ratios

  • 41% five year sales growth
  • 41% debt to equity ratio
  • 50% net profit margin
  • 42% return on equity
  • Solid ratios are a must, but a company’s balance sheet will usually determine its long term destination whether it’s sprinting forward in its industry or running backward.

    America Movil has $23 billion in cash which it can use to acquire other businesses, repurchase shares, or pay down debt. Also, it produces $7 billion in working capital and pays a nice 63 cent dividend per share. AMX looks absolutely gorgeous, and institutional investors seem to agree as well. Institutional ownership is increasing which is always a good sign.

    Long Term

    As for the long term, Movil’s future appears brighter than ever. A PEG ratio of .67 tells me two things: AMX is growing and is fairly cheap.

    I’m not telling you to pull the trigger right away. Just keep America Movil on your radar. Watch it for a couple days or weeks, see if it fits your short and long term plan, and then think about purchasing a share or two.

    AMX 1-yr chart
    AMX