Beverage and Metal Barons Break Away as Banks and Consumer Health Stumble

This quarter's earnings season was defined by a stark divergence: beverage and metals companies posted explosive growth while banks and consumer health names shrank. The median revenue growth for beverages soared 90.2% year over year, while consumer health fell 6.0%, a gap of nearly 100 percentage points. Such a wide spread underscores a market where commodity and consumer staples plays are pulling away from financials and health care.

Revenue growth by industry (median YoY)

Beverages and Metals Delivered Stellar Growth

The beverage industry, represented by AC, posted a staggering 90.2% revenue increase year over year, with EBITDA up 57.8% and net profit up 59.9%. This performance is unmatched by any other sector. Meanwhile, metals & mining, led by GMEXICO, saw revenue rise 35.0%, EBITDA jump 50.6%, and net profit surge 78.5%. These two sectors are the clear engines of growth this season.

Building materials also stood out, with CEMEX reporting revenue up 12.2%, EBITDA up 23.9%, and net profit up 9.0%. Among airports, ASUR led with revenue up 9.9%, though its EBITDA declined 7.6%. These results highlight that infrastructure-related demand remains robust, but cost pressures are evident in some cases.

Banks and Consumer Health Sputtered

The banking sector was a clear laggard, with median revenue down 1.9% year over year. BBAJIO saw revenue decline 2.9% and net profit fall 2.2%, while INBURSA reported revenue down 1.0% and net profit plunging 29.0%. Consumer health was even worse: LAB's revenue dropped 6.0%, and EBITDA plummeted 28.6%, despite a 5.5% increase in net profit. These declines signal weakening demand and margin pressures in these defensive sectors.

FEMSA's Profit Surge Is the Plot Twist

The biggest surprise came from FEMSA, a beverages & retail conglomerate, which reported a 104.2% surge in net profit year over year, far outpacing its revenue growth of 9.3% and EBITDA growth of 21.5%. This acceleration in profitability, likely driven by operational efficiencies or one-time gains, stands out in a season where many companies struggled to grow earnings. Investors should watch if this momentum is sustainable.

Valuations: Cheap Growth in Metals, Expensive Hopes in Beverages

For value-focused investors, GMEXICO stands out: it grew revenue 35.0% and net profit 78.5%, yet trades at a P/E of 14.9x and EV/EBITDA of 8.2x. That's remarkably cheap for such growth. In contrast, AC, despite its 90.2% revenue growth, trades at a P/E of 15.1x and EV/EBITDA of 6.6x, which may still be reasonable. However, CARSO looks expensive: it grew revenue only 3.9% but trades at a P/E of 38.7x and EV/EBITDA of 17.5x, a clear case of priced-for-perfection. Similarly, BIMBO with -2.2% revenue growth trades at a P/E of 20.1x, suggesting optimism not backed by current performance.

Dividend Seekers Find Yield in Telecom and Retail

While dividend yields were not provided for most companies, AMX stands out with a P/E of 13.1x and EV/EBITDA of 4.3x, suggesting potential for income. LIVERPOL, with a P/E of 7.6x and EV/EBITDA of 4.5x, also appears attractive for yield-focused investors, especially after its 55.4% net profit growth. These names offer a blend of value and income in a market where growth is scarce.

Long-Term Growth Stars: GAP and INBURSA

Looking beyond the quarter, GAP and INBURSA shine with 3-year revenue CAGRs of 14.8% and 16.0%, respectively. GAP's consistent performance in airports and INBURSA's resilience in banking, despite a tough quarter, suggest these companies have strong long-term trajectories. As we move forward, watch for whether the beverage and metals rally can sustain, and if banks can reverse their declines. The market's next move may hinge on whether growth broadens beyond the few standout sectors.

Players: growth & yield (no absolute levels)