Wal-Mart De Mexico: More Than Holding Its Own, But Margins Remain A Concern
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Stephen Simpson20.55K FollowersFollow5ShareSavePlay(9min)CommentsSummaryWal-Mart De Mexico has outperformed peers as a defensive play amid Mexico’s challenging consumer environment, with ADRs up ~25% since the last review.I see continued long-term upside for WMMVY, supported by resilient same-store sales, e-commerce growth, and expanding private label penetration, despite near-term margin pressures.Management is using pricing to maintain traffic, leading to modest margin compression, while ongoing investments in assortment, store expansion, and e-commerce weigh on margins and free cash flow.The stock appears about 10% undervalued, with a double-digit long-term annualized total return, but I remain wary of margin risks and Mexico’s economic volatility. Arnaud Eeckhout/iStock Editorial via Getty Images Defense turned out to be the right play in many sectors in Mexico this year, as a weaker economy and lower consumer confidence hit a number of companies. In the case of Wal-Mart De Mexico S.A.B. de C.V. (This article was written byStephen Simpson20.55K FollowersFollowStephen Simpson is a freelance financial writer and investor.Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds).Analyst’s Disclosure:I/we have a beneficial long position in the shares of FMX either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.