Intrinsic Value América Móvil, S.A.B. de C.V. (AMX)

• Previous Close: $20.34
• Intrinsic Value: $7.94
• Upside potential: -61%

Stock Valuation Context

Business Model And Market Position

América Móvil, S.A.B. de C.V. is a leading telecommunications provider in Latin America, operating across 25 countries with a dominant presence in Mexico, Brazil, and Colombia. The company generates revenue primarily through wireless and fixed-line services, including voice, data, and broadband, supplemented by pay-TV and digital solutions. Its vertically integrated model allows cost efficiencies and cross-selling opportunities, reinforcing its competitive edge in high-growth emerging markets. América Móvil benefits from extensive infrastructure, including fiber-optic networks and 4G/5G capabilities, which support its market leadership. The company’s scale and brand recognition enable it to maintain pricing power while capturing market share in underpenetrated regions. Strategic partnerships and acquisitions further solidify its position as a regional telecom giant, though regulatory pressures and competition remain key challenges. América Móvil’s diversified service portfolio and focus on digital transformation position it to capitalize on rising demand for connectivity and digital services in Latin America.

Revenue Profitability And Efficiency

América Móvil reported revenue of MXN 869.2 billion for FY 2024, reflecting steady demand for telecom services. Net income stood at MXN 28.3 billion, with diluted EPS of MXN 9.2, indicating moderate profitability amid inflationary and competitive pressures. Operating cash flow of MXN 239.3 billion underscores strong cash generation, though capital expenditures of MXN 113.1 billion highlight ongoing investments in network expansion and technology upgrades.

Earnings Power And Capital Efficiency

The company’s earnings power is supported by its large subscriber base and recurring revenue streams, though margins face pressure from regulatory costs and competition. Capital efficiency is balanced between growth investments and shareholder returns, with operating cash flow covering capex and dividends. América Móvil’s scale allows it to achieve economies of operation, but regional macroeconomic volatility remains a risk.

Balance Sheet And Financial Health

América Móvil’s balance sheet shows MXN 36.7 billion in cash and equivalents against total debt of MXN 781.6 billion, reflecting a leveraged but manageable position. The debt load is typical for capital-intensive telecoms, supported by stable cash flows. Liquidity appears adequate, but refinancing risks and currency fluctuations in emerging markets warrant monitoring.

Growth Trends And Dividend Policy

Growth is driven by expanding broadband and mobile data penetration, particularly in underserved markets. The company paid a dividend of MXN 10.08 per share, signaling commitment to shareholder returns. América Móvil’s dividend policy aligns with its cash flow stability, though reinvestment needs may limit aggressive payout increases.

Valuation And Market Expectations

The market values América Móvil as a defensive play in Latin America, with its stock reflecting steady cash flows and regional dominance. Valuation metrics likely account for regulatory risks and competitive dynamics, though long-term growth potential in digital services could justify premium pricing.

Strategic Advantages And Outlook

América Móvil’s strategic advantages include its extensive infrastructure, brand strength, and regional diversification. The outlook remains positive, supported by rising digital adoption, but regulatory hurdles and competition require nimble execution. The company’s focus on 5G and fiber expansion positions it for sustained leadership, albeit with margin pressures from upfront investments.

Sources

Company filings, Bloomberg