América Móvil: a 7.5% jump that only returns the stock to July

América Móvil closed at 22.71 MXN on 21 October, up 7.5% from 21.12 MXN the session before.[1] The company had reported third-quarter revenue of 250,634 million pesos the previous day, up 7.6% from a year earlier.[2] The share led the gains in the IPC, which closed above 70,000 points for the first time since late May.[2]

One strong session brought the stock back to about where it stood in July.

The price, in context

The longer numbers look comfortable. The share is up 22.4% since the start of the year and 10.9% over twelve months.[1] The shorter ones are less so: 22.71 MXN is 0.4% below the 22.8 MXN close of 24 July, and 5.1% below the twelve-month high of 23.92 MXN set on 12 June.[1]

Put another way, the stock went into the results about 7% below its July level, and the jump closed that gap. That is a recovery, not a new high.

Average daily volume over the last 20 sessions was 38.2 million shares, against 50.3 million in the earlier sessions.[1] That window includes results day, so it can’t tell us how investors behaved afterwards. It does show a quieter market in the weeks around the report.

Where the Mexican money came from

Telcel and Telmex together reported 90,295 million pesos of revenue in Mexico, up 5.6%, slower than the group’s 7.6%.[3] Service revenue reached 71,773 million pesos, up 5.2%, an improvement on the 4.4% growth reported for the second quarter.[3]

Cellular revenue was 67,248 million pesos, up 6.6%.[3] That total has two very different parts. Mobile services brought in 49,289 million pesos and grew 5.4%, while equipment sales brought in 17,959 million and grew 10%.[3] Within cellular, the faster-growing part is phones, which have to be sold again each time.

Within services, postpaid billing rose 8% and prepaid 3.5%, as the number of contract customers grew and the prepaid base shrank.[3] The report describes a smaller mobile subscriber base combined with higher revenue per user.[3]

Fixed-line revenue was 22,589 million pesos, up 4.7%.[3] Fixed services grew 4.6% after showing no change the quarter before, helped by a 10% rise in corporate networks, which had fallen 7.8% in the second quarter.[3]

What to watch

• The fixed-line recovery. One quarter of corporate network growth after a decline is not yet a trend.
• Revenue per user against line count. A smaller base with a higher average needs both numbers read together.
• The July and June closes. At 22.8 MXN and 23.92 MXN, they are the levels this report has not yet taken the stock clearly beyond.

The results were good enough for a 7.5% day. They have not yet taken the stock anywhere it hadn’t already been this year.