Telmex Internacional (TII) shares are trading about 24x consensus estimates for 2010 and 18x consensus EPS estimates for 2011.
At first blush, those P/E multiples look pricey. However, this Zacks Rank #1 stock has an expected long-term EPS growth rate of 21.8%, which makes its valuation look reasonable.
The stock also offers shareholders a decent dividend yield of 1.3%.
Company Description
Telmex provides various telecommunications services to corporate and residential customers in Brazil, Chile, and Mexico.. Its services include domestic and international long distance, local telephone service, data transmission and Internet access.
EPS Estimates Climbing Higher
For the fourth quarter of 2009, Telmex reported EPS of $0.41, topping the Zacks Consensus Estimate by 21 cents, or 105%.
In the last two months, analysts have been moving their earnings estimates higher. The Zacks Consensus Estimate for 2010 is up 4 cents, or 5.2%, to $0.81, and the Zacks Consensus Estimate for 2011 is up 4 cents, or 3.9%, to $1.08.
Industry Leader
Telmex stacks up well against its industry peers. TII’s return on equity is 11.9%, above the industry average of 8.7%. The company’s net profit margin of 11.7% crushes the industry’s NPM of 3.3%. Telmex is more profitable than its peers with a lower percentage of debt on its balance sheet. Telmex has a debt/equity ratio of 0.2% versus 28.7% for the industry.
