Viva la FEMSA!

Another one of my companies announced earnings today, this time it was Mexican consumer conglomerate FEMSA (FMX) reporting after the close. Although the results weren't a blowout, they were good enough.

Revenue was up a bit more than 6%, operating income was up almost 10%, and net income was up more than 150% as a lot of "other expenses" weren't repeated. Perhaps just as important for the short-term, the results were basically in line with the analyst estimates.

The company's Coca-Cola business saw revenue up about 5% and operating income up more than 6%, while the beer business saw operating income up almost 13%. Last and certainly not least, the company's Oxxo business posted nearly 29% operating income growth on same-store sales growth of 3%.

I'll be the first to admit that none of those numbers are great for a "growth" stock, but there were at least a few mitigating factors. Mexico's economy is in a rough patch too, particularly in the border regions, and that did no favors for the Coca-Cola and Oxxo businesses. Longer term, though, I still think there's a lot of leverage and potential left in these businesses -- particularly in the Oxxo business, which the company has only now just started to expand outside of Mexico.

Conglomerates pretty much always trade at a discount, and FEMSA is no exception (even if it's not as much of a conglomerate as, say, Nestle (NSRGY) or Pepsi (PEP)). Even with that handicap in place, though, there's an arbitrage opportunity with the Coca-Cola business (it's relatively cheaper to buy FEMSA than Coca Cola FEMSA (KOF)), the Heineken shares that the company is getting in exchange for the beer business, and growth opportunities still ahead with the Oxxo business.

All in all, I'm still quite happy to own FEMSA shares here. Yeah, it's not as exciting as some China stock, but you should be able to get another 20-25% out of this stock before it's trading at parity with its closest comps. That's good for a "Buy" for me.