TIGO

We rate MILLICOM INTERNATIONAL CELLULAR SA (TIGO) as a Buy with a composite score of 71.7/100 at a current price of $68.17. The stock scores above average across the majority of our six quantitative factors and ranks #66 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in momentum (86th percentile) and value (79th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a No Moat rating (21/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

MILLICOM INTERNATIONAL CELLULAR SA holds an above-average position (#15 of 50) within the Transportation, Communications, Electric, Gas, And Sanitary Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 71.7/100 places it at rank #66 in our full 7,333-stock universe. At $3.7B in market capitalization, MILLICOM INTERNATIONAL CELLULAR SA is a mid-cap player in the Transportation, Communications, Electric, Gas, And Sanitary Services space, which limits certain scale advantages but may allow for more agile strategic execution.

The outlook is moderately positive, with revenue expanding at 4% and favorable momentum (86th percentile) reflecting constructive market sentiment. The business shows steady execution, though the growth rate is below the levels typically associated with high-conviction growth stories. Momentum confirmation provides support for the current price level.

The margin cascade tells an important story: gross margins of 43% (-12.6pp vs sector) narrow to operating margins of 5% (-12.5pp vs sector) and net margins of 4.6%, yielding a gross-to-net conversion rate of 11%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $68.17, MILLICOM INTERNATIONAL CELLULAR SA appears undervalued relative to its fundamentals. Our value factor score of 79/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at EV/EBITDA of 2.9x (discounted to peers), P/B of 14.8x, P/S of 0.5x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to MILLICOM INTERNATIONAL CELLULAR SA. The stock presents a balanced risk profile: significant leverage (884% debt-to-equity) and low beta of 0.15 — while defensive, this may indicate limited upside participation in bull markets. While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (884% debt-to-equity); low beta of 0.15 — while defensive, this may indicate limited upside participation in bull markets; the combination of leverage (884% D/E) and thin margins (4.6% net) amplifies downside risk. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 71th percentile and quality factor at the 64th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 43% provide a buffer against cost pressures; above-average stability (71th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate MILLICOM INTERNATIONAL CELLULAR SA's capital allocation as Poor. Key concerns include elevated leverage (884% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — MILLICOM INTERNATIONAL CELLULAR SA significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, MILLICOM INTERNATIONAL CELLULAR SA receives a Buy rating with a composite score of 71.7/100 (rank #66 of 7,333). Our quantitative framework assigns a No Moat (21/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 75/100.

Our analysis supports a constructive view on MILLICOM INTERNATIONAL CELLULAR SA. The combination of the current valuation, medium uncertainty, and poor capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.