Value
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.5 |
| P/S | 10.0 |
| EV/EBITDA | 10.0 |
| Fwd P/E | 5.3 |
| PEG | 2.3 |
| Analyst target | 4.0 |
- ▸Forward P/E: 24.1x
- ▸PEG: 5.32
FMX · Why this verdict
Why Fomento Economico Mexicano (FMX) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Constructive technical structure — golden cross, volume accumulation, and exceptionally strong free cash flow conversion — is offset by three consecutive earnings misses prior to the most recent quarter's outsized beat and a reward-to-risk ratio well below 1-to-1, leaving the setup unattractive for new capital at current prices.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The stock has formed a golden cross, trades above all key moving averages with rising on-balance volume, and momentum sits at 7.8 — well above the 5.5 threshold — indicating a constructive technical trend that is consistent with accumulation by longer-term holders. Momentum breakdown | The stock holds above the 200-day moving average and on-balance volume continues to trend higher over the next 12 months. | ↓Deteriorating |
| CounterThe stock is within 3.2% of its 52-week high and only about 1.3% below the near-term price target; the technical breakout has little room to extend before the setup exhausts itself or attracts profit-taking. | ||
Free cash flow stands at 560% of reported net income, indicating the business generates substantially more cash than its accounting earnings suggest; this is supported by a Piotroski financial health score of 7 out of 9. Quality breakdown | Free cash flow relative to net income remains above 200% over the next four reporting periods, confirming the structural cash advantage is not a transient effect. | →Stable |
| CounterAn extreme free cash flow premium over net income can reflect temporary working-capital releases or deferred obligations; if accruals normalize, the ratio could compress sharply without any deterioration in reported earnings. | ||
Three of the four most recent quarters were earnings misses — falling 60%, 19%, and 28% below consensus — before the latest quarter delivered a 225% positive surprise; the erratic delivery record makes it difficult to assess whether the beat represents a genuine reset or a favorable anomaly. Earnings | EPS surprise remains positive for at least 2 consecutive quarters following the most recent beat, confirming the miss streak has genuinely ended. | →Stable |
| CounterThe magnitude of the most recent beat likely reflects a heavily reset estimate baseline; if consensus expectations have been re-anchored at lower levels, subsequent quarters could sustain positive surprises even at modest absolute earnings. | ||
At the current price, the reward-to-risk ratio stands at 0.28-to-1 with only about 1.3% of headroom to the near-term price target; the asymmetry measure has turned negative, and the stock has effectively reached and passed the level at which new positions make sense. Price targets | A meaningful pullback restores upside to the price target above 10%, bringing the reward-to-risk ratio above 1.5-to-1 and creating a defensible entry. | Tripped↑Improving |
| CounterStrong technical momentum — a confirmed golden cross with rising volume — can allow price to overshoot near-term targets; if the most recent earnings beat prompts upward estimate revisions, the price target itself may shift higher, restoring apparent upside. | ||
The stock has formed a golden cross, trades above all key moving averages with rising on-balance volume, and momentum sits at 7.8 — well above the 5.5 threshold — indicating a constructive technical trend that is consistent with accumulation by longer-term holders.
↓DeterioratingMomentum breakdown
- Expectation
- The stock holds above the 200-day moving average and on-balance volume continues to trend higher over the next 12 months.
CounterThe stock is within 3.2% of its 52-week high and only about 1.3% below the near-term price target; the technical breakout has little room to extend before the setup exhausts itself or attracts profit-taking.
Free cash flow stands at 560% of reported net income, indicating the business generates substantially more cash than its accounting earnings suggest; this is supported by a Piotroski financial health score of 7 out of 9.
→StableQuality breakdown
- Expectation
- Free cash flow relative to net income remains above 200% over the next four reporting periods, confirming the structural cash advantage is not a transient effect.
CounterAn extreme free cash flow premium over net income can reflect temporary working-capital releases or deferred obligations; if accruals normalize, the ratio could compress sharply without any deterioration in reported earnings.
Three of the four most recent quarters were earnings misses — falling 60%, 19%, and 28% below consensus — before the latest quarter delivered a 225% positive surprise; the erratic delivery record makes it difficult to assess whether the beat represents a genuine reset or a favorable anomaly.
→StableEarnings
- Expectation
- EPS surprise remains positive for at least 2 consecutive quarters following the most recent beat, confirming the miss streak has genuinely ended.
CounterThe magnitude of the most recent beat likely reflects a heavily reset estimate baseline; if consensus expectations have been re-anchored at lower levels, subsequent quarters could sustain positive surprises even at modest absolute earnings.
At the current price, the reward-to-risk ratio stands at 0.28-to-1 with only about 1.3% of headroom to the near-term price target; the asymmetry measure has turned negative, and the stock has effectively reached and passed the level at which new positions make sense.
Tripped↑ImprovingPrice targets
- Expectation
- A meaningful pullback restores upside to the price target above 10%, bringing the reward-to-risk ratio above 1.5-to-1 and creating a defensible entry.
CounterStrong technical momentum — a confirmed golden cross with rising volume — can allow price to overshoot near-term targets; if the most recent earnings beat prompts upward estimate revisions, the price target itself may shift higher, restoring apparent upside.
Per-dimension breakdown
Quality
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 4.1 |
| ROA | 4.1 |
| Gross margin | 4.1 |
| Op margin | 5.0 |
| Net margin | 1.7 |
| Current ratio | 4.5 |
| FCF quality | 10.0 |
| Moat | 5.5 |
| Piotroski F | 7.8 |
- ▸Excellent cash conversion: 560% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
Growth
7.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 4.0 |
| EPS growth | 10.0 |
Momentum
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.3 |
| Price target | 5.4 |
| erm sentiment | 5.0 |
Insider
4.0/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 4.1 |
| notable moves | 3.0 |
- ▸Negligible insider selling — $92,621 (0.000% of mkt cap)
Peer rank
4.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.3 |
| quality rank | 4.7 |
| growth rank | 7.5 |
Technical
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.1 |
| support resistance | 5.3 |
| 52w position | 9.2 |
Risk (lower is worse)
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| days to cover | 7.1 |
| volatility | 6.7 |
| put call | 10.0 |
| implied vol | 6.5 |
| max pain risk | 5.0 |
| beta | 10.0 |
| debt equity | 5.7 |
Catalyst
5.2/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 5.8 |
- ▸Earnings concerns: 1B/3M
- ▸Earnings in 4 days
- ▸Dividend: 4.5%
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (5)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (3)
- MOMENTUM:4.3<4.5
- ASYMMETRY:-1.5=NEGATIVE
- EARNINGS_PROXIMITY:4d<=7d
Warning (0)
none
Reward-to-Risk
-1.51
Upside
-7.6%
Downside
5.0%
Sizing output
AVOID
SetupRange Bound — RSI 50 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 5.5 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Risk (lower is worse) at 7.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:4.3<4.5, ASYMMETRY:-1.5=NEGATIVE, EARNINGS_PROXIMITY:4d<=7d) reinforce the read. Current asymmetry R:R is -1.51 — supplementary context, not the trigger for this path.
The strongest dimensions are Risk (lower is worse) at 7.3, Growth at 7.0, and Technical at 6.5; the weakest are Insider at 4.0, Momentum at 4.3, and Peer rank at 4.4. The V9 engine flagged 3 failed gates, producing an asymmetric reward-to-risk of -1.51 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Delivery Volatility
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Technical Breakout Structure
Trip ifStock closes below the 200-day moving average for 10 consecutive trading days.
- P3Exceptional Free Cash Conversion
Trip ifFree cash flow falls to less than 150% of net income for 2 consecutive reporting periods, indicating the conversion premium has substantially eroded.
- P4Unfavorable Reward Risk At TargetTripped
Trip ifUpside to the near-term price target exceeds 10% as the stock retreats, restoring a reward-to-risk ratio above 1.5-to-1.