r/valueinvesting
FMX - Fomento Económico Mexicano
Author sees FMX as slightly undervalued due to conglomerate discount, citing strong OXXO/KOF fundamentals and 22% YoY fintech growth.
- Trading at an EV/EBITDA of 8.57, below the industry average of 10.68, indicating it is slightly undervalued.
- Strong core businesses with OXXO processing 30 million daily transactions and KOF as Coca-Cola's largest franchise bottler.
- Fintech subsidiary Spin by OXXO is growing rapidly, with membership up 22% YoY, driving digital engagement.
- The complex conglomerate structure leads to a valuation discount.
What is your opinion of FMX? THe idea of foreign constumer staples seems attractive, and it appears slightly undervalued. EV / EBITDA is 8.57 compared to industry average 10.68. They're a conglomorate with many subsidiaries, but two of them earn the lion's share of revenue: OXXO (South & Central America's version of 7/11) and KOF (Coca-Cola's largest franchise bottler). Across Mexico there are 30 million daily transaction tickets at OXXO. 50% of these customers are enrolled in Spin by OXXO, another subsidiary of FMX that issues debit cards and operates a digital finance app that incentives purchases at OXXO. Spin by OXXO members increased 22% YoY. I believe they're being discounted due to the complexity of the conglomorate