FMX Boosts Share Repurchase Plan, Progresses Well on Forward Strategy

Fomento Economico Mexicano S.A.B. de C.V. FMX, alias FEMSA, is focused on its Forward Strategy, which emphasizes the long-term value creation of its core businesses. FEMSA's capital allocation strategy revolves around key principles aimed at maximizing shareholder value while maintaining prudent financial management. 

In the latest move, the company entered into an accelerated share repurchase (ASR) agreement with a financial organization in the United States to buy back its shares via the acquisition of American Depositary Shares (ADS).

According to the conditions of the ASR agreement, FEMSA will repurchase a total amount of $250 million of its ADS1 from the financial institution. The ASR looks to make an initial delivery of 483,559 ADSs on May 20, 2025.

FEMSA’s latest action syncs well with its capital-allocation approach and commitment to maximize shareholders' returns. Per the ASR agreement, the total number of repurchased shares will be based on the daily volume-weighted average price of the company’s ADS within the term of the agreement, less a discount. The ASR agreement’s final settlement is likely to be done by third-quarter 2025.

Additionally, FEMSA intends to return capital to shareholders as a crucial aspect of its overall strategy, following the successful completion of divestments related to FEMSA Forward and considering expected capital needs.

What’s More to Know About FEMSA?

FEMSA’s shares have gained 1.8% against the industry’s 1.2% decline in the past year. This Zacks Rank #4 (Sell) company has been witnessing a soft consumer environment. It faces rising operating expenses, due to a combination of inflationary pressures, supply-chain disruptions and higher labor costs. These challenges have affected multiple business segments, with the Health Division in Mexico particularly struggling due to increased costs and intensified competition.
 

Nevertheless, FEMSA is progressing on its FEMSA Forward Strategy to drive value in its core businesses, Retail (including the Health Division), Coca-Cola FEMSA and Digital@FEMSA. The strategy also includes exploring alternatives for its strategic business, including potential divestments. OXXO Mexico remains a key pillar of FEMSA's retail operations, driven by its ongoing efforts to refine and expand its value proposition while growing its footprint and scale to better serve customers.

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.

Stocks to Consider in the Consumer Staples Space

Nomad Foods NOMD, which manufactures frozen foods, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
 
NOMD delivered a trailing four-quarter earnings surprise of 3.2%, on average. The Zacks Consensus Estimate for Nomad Foods’ current financial-year earnings per share (EPS) indicates growth of 7% from the year-ago number. 
 
United Natural Foods UNFI, which is a distributor of natural, organic and specialty food in the United States, currently carries a Zacks Rank #2 (Buy).  
 
UNFI delivered a trailing four-quarter earnings surprise of 408.7%, on average. The Zacks Consensus Estimate for UNFI’s current financial-year sales and EPS indicates growth of 1.9% and 488.6%, respectively, from the year-ago numbers. 
 
Utz Brands UTZ manufactures salty snacks under popular brands and has a Zacks Rank of 2 at present. UTZ delivered a trailing four-quarter average earnings surprise of 6.9%. 
 
The Zacks Consensus Estimate for UTZ’s current financial-year sales and EPS implies growth of 1.4% and 10.7%, respectively, from the year-ago numbers.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research