Is America Movil (AMX) Poised to Beat on Earnings? - Analyst Blog

Are you looking for a stock that is in a good position to beat on earnings in its next report? Then consider America Movil S.A.B de CV Inc. AMX, which is slated to release first quarter 2014 results on Apr 30, after market close. Last quarter, the company's reported earnings were below our estimate. Let's see how things are shaping up prior to this announcement.

Why a Likely Positive Surprise?

Our proven model shows that America Movil is likely to beat earnings because it has the right combination of two key ingredients.

Zacks ESP:Earnings ESP which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +31.71% for America Movil. This is a meaningful and leading indicator of a likely positive earnings surprise. 

Zacks Rank: America Movil currently has a Zacks Rank #3 (Hold). Note that stocks with Zacks Ranks of #1 (Strong Buy), 2 (Buy) or 3 have a significantly higher chance of beating earnings. 

The combination of AMX's Zacks Rank #3 and +31.71% ESP makes us confident of an earnings beat this release.

What is Driving Better-Than-Expected Earnings?

We remain encouraged by the company's progress in the LTE (Long-Term Evolution) space with the launch of services in Mexico and Brazil. Further, growth in its post-paid subscriber base owing to expansion in LTE network will lead to market share expansion. Unprecedented adaptation of smartphones will also be accretive to revenue growth in the future.

However, we are concerned about the interconnection rate reductions in both Mexico and Brazil, which are putting pressure on its margins. Additionally, regulatory issues in key markets, aggressive promotional activities and depreciation of local currencies may affect the company's performance.

Other Stocks to Consider

Here are some other companies to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Level 3 Communications Inc. LVLT with earnings ESP of +10.71% and Zacks Rank #1.

BCE Inc. BCE with earnings ESP of +1.47% and Zacks Rank #3.

Charter Communications Inc. CHTR with earnings ESP of +40.00% and Zacks Rank #3.