On Wednesday, Jefferies research firm began coverage on Alsea SAB de CV (BMV:ALSEA:MM) (OTC: ALSSF), a leading operator of restaurant chains in Latin America, Europe, and Asia, with a favorable Buy rating and a price target set at Peso50.00. The new price target suggests a positive outlook for the company’s shares, which are currently traded on the Mexican Stock Exchange and over-the-counter markets.
The initiation of coverage by Jefferies comes with an analysis of Alsea’s financial prospects, indicating that the price target is based on an estimated 4.5 times the company’s 2026 expected enterprise value to EBITDA (EV/EBITDA) ratio and 12 times the price to earnings (P/E) ratio. These metrics are considered to be aligned with the average ratios of Alsea’s Latin American peers and its own historical performance.
Alsea’s momentum is anticipated to continue facing challenges due to the weakening Mexican peso, which affects profit margins. Additionally, the company’s high leverage and cost of debt are areas of concern. Despite these factors, Jefferies finds Alsea’s valuation compelling, with a price to earnings ratio of 10 times for the year 2026, and an enterprise value to EBITDA ratio of 4 times compared to a 7% compound annual growth rate in EBITDA and a 17% return on invested capital.
The analyst’s commentary also highlights that Mexico accounts for 55% of Alsea’s sales, and notes that the Mexican consumer market is showing signs of weakening. Moreover, the company faces risks associated with the easing, yet ongoing, boycott of American brands, as evidenced by a 7.4% decline in same-store sales for Starbucks (NASDAQ:SBUX) in the fourth quarter, which was an improvement from a 12.3% drop in the third quarter.
The Buy rating and Peso50.00 price target reflect Jefferies’ view that, despite the current headwinds, Alsea’s stock offers an attractive investment opportunity relative to its growth potential and profitability measures.
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