We initiate coverage on América Móvil with a Buy rating and a $27.00 price target. At 12.6 times 2027 earnings, the market overdiscounts currency headwinds, ignoring 13.9% operating profit growth, de-leveraging to 1.21 times EBITDA, and steady postpaid market share gains.
Key points
- 12.6 times 2027 estimated earnings undervalues Latin America's telecom leader, whose operating profit expanded 13.9% year over year in the third quarter of 2026.
- 1.21 times net leverage sits well below management's 1.5 times ceiling, unlocking expanding share repurchases alongside self-funded network investments.
- 3.1 million postpaid subscribers added across Mexico, Brazil, and Colombia demonstrate sustained customer migration into higher-margin mobile plans.
The call
The current price of $23.00 requires América Móvil to deliver virtually flat earnings, implying 2027 earnings of just $1.53 per share at a mid-cycle 15.0 times multiple. That prices in severe currency depreciation and structural margin contraction, overlooking 7.6% revenue growth and expanding operating margins across core markets.
Quarterly operating profit expansion (MXN billions)- Reported Operating Income
- Forecast Operating Income
Sources: América Móvil financial reports and desk estimates, as of October 2026. Values in billions of Mexican pesos.
We believe the market is too pessimistic. Postpaid contract migration and disciplined fiber broadband additions in Brazil and Peru will drive 2027 earnings per share to $1.80. Paired with debt reduction of MXN 34.3 billion year to date, compounding cash returns justify a 15.0 times earnings multiple, generating 17.4% upside.
Valuation
| Metric | Value |
|---|
| 2027 estimated net income | MXN 100.0 billion |
| 2027 estimated diluted share count | 59.3 billion shares |
| 2027 estimated earnings per share | MXN 1.69 (MXN 33.73 per ADS) |
| Assumed exchange rate | 18.75 pesos per dollar |
| 2027 estimated earnings per ADS | $1.80 |
| Target price-to-earnings multiple | 15.0 times |
| 12-month price target | $27.00 |
América Móvil warrants a 15.0 times multiple, in line with premier global telecom incumbents and above its depressed 12.6 times forward multiple. The company generates robust free cash flow, yields 2.6% in dividends, and repurchases shares consistently. Asymmetric upside of 17.4% comfortably supports a Buy rating.
Risks
- Aggressive pricing discounts from Brazilian mobile competitors TIM and Vivo could pressure monthly contract revenue per user.
- Heightened volatility in the Mexican peso or Brazilian real could inflate foreign currency debt service costs and reduce dollar earnings.
- Ongoing mandatory prepaid SIM registration deadlines in Mexico through December 2026 could accelerate inactive line disconnections and elevate churn.
What would change my mind
Persistent prepaid line losses spilling into postpaid revenue or currency depreciation pushing net leverage back above 1.6 times EBITDA would force a downgrade.