The reporting season for the first quarter began in Mexico with mixed figures that show how the economic context has become complicated at the beginning of 2022. wall streetwith reports already from a good part of the main broadcasters (although still a minority), the results have also been mixed.
About 20% of the benchmark S&P 500 index sample have submitted their figures. According to Refinitiv, of these 99 companies that have reported, 77.80% have recorded profits higher than expected and 69.70% have shown sales that exceeded numbers estimated by analysts.
In Mexico, with only a few reports presented so far, mixed performances are also observed, most in line with expectations taking into account the environment of higher inflation that implies challenges to offset the higher costs of issuers such as Gruma and Kimberly-Clark of Mexico.
“We believe that the quarter will be an important challenge for most companies in the Mexican capital market, in a complex environment characterized by factors such as sustained inflationary pressures and lower prospects for the pace of recovery,” said Luis Bezies, an analyst at Valmex. .
Volatility and expectations
For Eduardo López, an analyst at the VX+ firm, it is still early to see in the local quarterly reports the level of damage that the economy presented in the first quarter of 2022. But the US market does show the new dynamics with issues such as inflation, war and higher rates.
“For now, the market is not only reacting to reports, although we have seen those of relevant companies, such as Tesla or the US airlines, which did manage to boost the market in their respective days, other factors intervened causing falls”, Lopez stated.
Despite the fact that the elements of volatility have surpassed in influence that of the quarterly reports and the guides of the companies, the expert affirmed that in the long term the information issued by the issuers has a greater relevance, which includes these variables and is fundamental. not to speculate.
Expectations Update
The fact that the results have been mixed has not prevented strong adjustments, up or down, in reaction to the quarterly reports. The one that was most publicized in the media, for obvious reasons, was that of Netflix, which lost 35% after announcing a drop in subscribers.
Retail operators consulted were in favor of making purchases of their shares to take advantage of the strong movement, however, for Luis Bezies they should first carry out an analysis that considers more factors in terms of valuation and expectations and conditions of the issuer.
“It is essential to incorporate the updating of expectations and estimates into a detailed analysis, taking into account what was mentioned by the board of directors of the issuers in their calls for quarterly results and the implications that this could have in these valuation terms,” he added.
See the big ones without skipping the little ones
Being an index of 35 components, the S&P/BMV IPC, which brings together the most traded shares in the Mexican market and which considers other criteria such as capitalization, is more susceptible to the good results of some large firms driving the market by themselves.
However, it is also important for Mexican investors not to omit the results of issuers with lower weights in the S&P/BMV IPC, “since together they can also represent an upward or downward catalyst for the performance of the index,” Bezies said.
The companies with the highest weighting in the index are: the giant América Móvil, the retailer Walmex, the mining company Grupo México and the Grupo Financiero Banorte, the largest bank in Mexican hands. So far this season, of them, only Banorte has presented its figures for the quarter.
In the first quarter of 2022, the profit of Grupo Financiero Banorte grew 10,748 million pesos, which represented an increase of 26% compared to the same period of 2021, with 8,544 million. Positive figures are also expected for Walmex, Grupo México and América Móvil.
“Speaking of the Mexican Stock Exchange, we can think of a mixed impact due to the economic environment of higher inflation and war, because there is no high international exposure as there is in the United States. You can think of a more or less defensive behavior,” López said.