Grupo Aeroportuario del Sureste, S.A.B. de C.V.
(
ASR
), or
Southeast Airport Group
, recently delivered strong first quarter results driven by a
strong increase in passenger traffic.
Earnings estimates have been steadily rising as a result, sending
the stock to a Zacks #1 Rank (Strong Buy) stock. Based on current
consensus estimates, analysts expect 21% EPS growth this year and
12% growth next year.
On top of this growth, the company pays a dividend that yields a
juicy 3.9%.
Mexican Monopoly
Southeast Airport Group is a Mexican airport operator with
concessions to operate, maintain and develop the airports in
tourist-heavy southeast Mexico, including Cancún, Veracruz and
Cozumel.
The company was formed in 1998 after the Mexican government decided
to privatize some of its airports. The company has experienced
strong and relatively steady revenue and profit growth since then
as it essentially has a monopoly on the airports in southeast
Mexico.
First Quarter Results
Southeast Airport Group delivered strong first quarter results on
April 24. Earnings per share came in at $1.40, beating the Zacks
Consensus Estimate of $1.26. It was a 29% increase over the same
quarter in 2011.
Total revenues soared 21% year-over-year, driven by a 10% increase
in passenger traffic. The number of domestic passengers grew 20%
while the number of international passengers rose 6%.
Operating income increased 25% as the company leveraged its fixed
expenses. The operating margin for Q1 was a remarkable 56.7%, up
from 54.8% in the same quarter last year.
Estimates Rising
Estimates have been marching higher following Southeast Airport
Group's strong Q1 results, sending the stock to a Zacks #1 Rank
(Strong Buy) stock.
The Zacks Consensus Estimate for 2012 is now $4.61, representing
21% growth over 2011 EPS. The 2013 consensus estimate is currently
$5.19, corresponding with 12% growth.
As you can see in the Price & Consensus chart, consensus
estimates have been soaring, along with the stock price, over the
last several months:
Strong Dividend
On top of strong growth, Southeast Airport Group offers a dividend
that yields a solid 3.9%. The company pays an annual dividend based
on its annual net retained earnings. In May 2012, it paid a
dividend of $2.76 per share, up from $2.55 in 2011.
Reasonable Valuation
Shares of ASR
are
up 38% since I first wrote about it back on September 21.
But the valuation picture still looks reasonable.
Shares trade at 15.6x 12-month forward earnings, a discount to its
10-year median of 17.4x. Its price to book ratio of 1.7 is in-line
with its peers.
The Bottom Line
With a virtual monopoly on the airports in a tourist-heavy region
of Mexico, Southeast Airport Group should deliver strong earnings
growth for many years. With rising earnings estimates, a fat
dividend yield and reasonable valuation, this stock offers
attractive total return potential.
Todd Bunton is the Growth & Income Stock Strategist for
Zacks Investment
Research
and Editor of the
Income Plus Investor service
.
GRUPO AEROP-ADR (ASR): Free Stock Analysis
Report
GRUPO AEROP-ADR (ASR): Free Stock Analysis
Report
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