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On Thursday, JPMorgan analyst Lucas Ferreira upgraded Arca Continental SAB de CV (BMV:AC) shares from Neutral to Overweight, raising the price target to Peso250.00 from Peso206.00. The upgrade followed Arca Continental’s robust performance and its five-year growth guidance, which JPMorgan believes offers potential for earnings above their previous projections.
Arca Continental’s shares responded positively to the announcement, as the company’s new growth outlook suggests significant upside. JPMorgan has increased its 2025 earnings before interest, taxes, depreciation, and amortization (EBITDA) and earnings per share (EPS) estimates for Arca Continental by 26% and 22%, respectively. These revised estimates are now 8% and 6% higher than the consensus.
The firm’s analysts have also adjusted their five-year EBITDA compound annual growth rate (CAGR) forecast to 8.2% from 5.5%. This adjustment aligns with the lower end of Arca Continental’s guidance range of 8-10%. Consequently, the new projections indicate a five-year EPS growth CAGR of 12%, ranking Arca Continental at the higher end among Mexican consumer stocks.
The optimistic outlook is supported by Arca Continental’s strong management credibility. JPMorgan’s analysis suggests that both U.S. and Mexico margins for Arca Continental could reach new highs. These expectations are driven by robust pricing strategies, which are supported by artificial intelligence, an optimized sales mix, and low price elasticity. Additionally, the company is expected to benefit from efficiency gains and controlled expenses.
Arca Continental’s strategic direction and growth potential have positioned it as an attractive value and growth opportunity in the eyes of JPMorgan. This is particularly notable given the stock’s approximately 11% outperformance relative to the Mexbol index since the beginning of the year.
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