Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, shares have rolled down 35.7% in the past year. With this decline, FMX shares have underperformed the broader industry and the Consumer Staples sector’s dip of 6.7% and 4.4%, respectively. The company’s shares have also underperformed the S&P 500’s rally of 23.6% in the same period.

FMX’s One-Year Stock Performance

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At the current price of $83.59, the FMX stock trades at a 41.7% discount to its 52-week high of $143.43. The current stock price reflects a 3.1% premium from its 52-week low mark. FEMSA trades below its 50 and 200-day moving averages, indicating a bearish sentiment.

Challenges Facing FEMSA’s Stock Performance

FMX continued to witness a soft consumer environment, particularly in the Mexico market, its largest growth driver, in third-quarter 2024. Consequently, the company reported mixed trends in Proximity Americas, with year-over-year sales growth of 4.8% and flat same-store sales. The segment’s same-store sales reflected a 6.1% rise in average customer tickets, offset by a 5.7% store traffic decline. The lower store traffic was due to adverse weather conditions in Mexico, a challenging comparison period and a weaker consumer environment in Mexico since the end of the second quarter of 2024.

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Looking further, the Thirst and Gathering consumption occasions, which are crucial for OXXO, were notably affected by adverse weather conditions, leading to significant underperformance in beer, sparkling beverages and water in the third quarter. Additionally, the company’s Health segment showed impacts of the intense competitive environment in Mexico, which partly offset the otherwise strong results for the segment.

Can FMX’s Strategies Aid a Turnaround?

FEMSA stays on the list of investors’ favorite beverage stocks, mainly because of effective growth strategies and strong market demand. The company is progressing on the FEMSA Forward Strategy, which is focused on the long-term value creation of its core businesses — retail, Coca-Cola FEMSA KOF and Digital@FEMSA. Its retail business provides substantial opportunities for long-term growth, backed by improvements in the Proximity division.

FMX has been gaining pace in the digital space through its tech and innovation unit, Digital@FEMSA, which aims to build a value-added digital and financial ecosystem for consumers and businesses. This unit also focuses on enhancing and leveraging the strategic assets of FEMSA’s core business verticals.

Coca-Cola FEMSA is at the forefront with its omni-channel approach, whereas the Proximity division continues to advance digital initiatives within OXXO stores. The company is actively investing in digital offerings, loyalty programs and fintech platforms within its OXXO chains to strengthen its long-term position.

FMX has been witnessing solid growth trends across all business units. FEMSA’s Proximity and Health retail businesses offer significant opportunities for long-term growth and value creation. The company is on track to accelerate earnings growth in its retail division through organic expansion, and by continually enhancing the value it provides to consumers across various formats and markets.

Does Discounted Valuation Drive Optimism?

From a valuation perspective, FEMSA offers an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-earnings ratio of 15.55X, which is below the five-year high of 30.71X and the Beverages – Soft Drinks industry’s average of 18.74X, the stock offers compelling value for investors seeking exposure to the sector.

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FMX’s Investment Potential

A focus on FEMSA Forward strategy, digital expansion, and potential in its Proximity and Health retail businesses offer significant opportunities for long-term growth and value creation. These efforts highlight the company’s resilience and adaptability in a dynamic market. However, FMX is likely to witness a soft consumer environment, particularly in the Mexico market, which is expected to hurt near-term results. Consequently, investors should remain cautious about this Zacks Rank #3 (Hold) stock for now.

2 Promising Stocks

Some better-ranked stocks in the border sector are Vita Coco Company COCO and The Boston Beer Company SAM.

Vita Coco develops, markets and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa and the Asia Pacific. The company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for COCO’s 2025 earnings and sales indicates growth of 11.3% and 20.8%, respectively, from the previous year’s reported figures. Vita Coco has a trailing four-quarter average earnings surprise of 17.6%.

Boston Beer is one of the largest craft brewers in the United States. The company produces beer, malt beverages, and cider products at company-owned breweries and under contract. Boston Beer currently has a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for the company’s 2025 sales and earnings implies growth of 2.6% and 24.4%, respectively, from the previous year’s reported number. SAM has a trailing four-quarter average earnings surprise of 154.6%.

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Vita Coco Company, Inc. (COCO) : Free Stock Analysis Report

Fomento Economico Mexicano S.A.B. de C.V. (FMX) : Free Stock Analysis Report

Coca Cola Femsa S.A.B. de C.V. (KOF) : Free Stock Analysis Report

The Boston Beer Company, Inc. (SAM) : Free Stock Analysis Report

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