Critical Analysis: Coca Cola Femsa S.A.B. de C.V. (NYSE:KOF) vs. Fomento Economico Mexicano S.A.B. de C.V. (FMX)

Fomento Economico Mexicano S.A.B. de C.V. (NYSE: FMX) and Coca Cola Femsa S.A.B. de C.V. (NYSE:KOF) are both large-cap consumer staples companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Profitability

This table compares Fomento Economico Mexicano S.A.B. de C.V. and Coca Cola Femsa S.A.B. de C.V.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fomento Economico Mexicano S.A.B. de C.V. 5.26% 8.42% 4.44%
Coca Cola Femsa S.A.B. de C.V. 7.09% 10.72% 5.04%

Analyst Recommendations

This is a breakdown of recent recommendations for Fomento Economico Mexicano S.A.B. de C.V. and Coca Cola Femsa S.A.B. de C.V., as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fomento Economico Mexicano S.A.B. de C.V. 0 1 3 0 2.75
Coca Cola Femsa S.A.B. de C.V. 0 2 3 0 2.60

Fomento Economico Mexicano S.A.B. de C.V. currently has a consensus target price of $102.00, suggesting a potential upside of 1.03%. Coca Cola Femsa S.A.B. de C.V. has a consensus target price of $98.33, suggesting a potential upside of 15.86%. Given Coca Cola Femsa S.A.B. de C.V.’s higher possible upside, analysts clearly believe Coca Cola Femsa S.A.B. de C.V. is more favorable than Fomento Economico Mexicano S.A.B. de C.V..

Dividends

Fomento Economico Mexicano S.A.B. de C.V. pays an annual dividend of $1.32 per share and has a dividend yield of 1.3%. Coca Cola Femsa S.A.B. de C.V. pays an annual dividend of $1.75 per share and has a dividend yield of 2.1%. Fomento Economico Mexicano S.A.B. de C.V. pays out 49.1% of its earnings in the form of a dividend. Coca Cola Femsa S.A.B. de C.V. pays out 51.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Insider and Institutional Ownership

23.8% of Fomento Economico Mexicano S.A.B. de C.V. shares are owned by institutional investors. Comparatively, 7.1% of Coca Cola Femsa S.A.B. de C.V. shares are owned by institutional investors. 1.0% of Coca Cola Femsa S.A.B. de C.V. shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Fomento Economico Mexicano S.A.B. de C.V. and Coca Cola Femsa S.A.B. de C.V.’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fomento Economico Mexicano S.A.B. de C.V. $24.77 billion 1.46 $3.02 billion $2.69 37.53
Coca Cola Femsa S.A.B. de C.V. $11.22 billion 0.40 $2.11 billion $3.41 24.89

Fomento Economico Mexicano S.A.B. de C.V. has higher revenue and earnings than Coca Cola Femsa S.A.B. de C.V.. Coca Cola Femsa S.A.B. de C.V. is trading at a lower price-to-earnings ratio than Fomento Economico Mexicano S.A.B. de C.V., indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Fomento Economico Mexicano S.A.B. de C.V. has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500. Comparatively, Coca Cola Femsa S.A.B. de C.V. has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500.

Summary

Coca Cola Femsa S.A.B. de C.V. beats Fomento Economico Mexicano S.A.B. de C.V. on 8 of the 15 factors compared between the two stocks.

About Fomento Economico Mexicano S.A.B. de C.V.

Fomento Economico Mexicano, S.A.B. de C.V. (FEMSA) is a holding company. The Company’s segments are Coca-Cola FEMSA, FEMSA Comercio-Retail Division and FEMSA Comercio-Fuel Division. The Company conducts its operations through holding companies, such as Coca-Cola FEMSA, S.A.B. de C.V. and subsidiaries (Coca-Cola FEMSA), which produces, distributes and sells beverages; FEMSA Comercio, S.A. de C.V. and subsidiaries (FEMSA Comercio), which consists of a Retail Division operating various small-format chain stores, and CB Equity LLP, which holds its equity investment in Heineken N.V., and Heineken Holding N.V. The Company’s Coca-Cola FEMSA produces, markets, sells and distributes Coca-Cola trademark beverages through standard bottler agreements in certain territories in the countries, in which it operates. Coca-Cola FEMSA also sells bottled water products. FEMSA participates in the retail sector primarily through FEMSA Comercio.

About Coca Cola Femsa S.A.B. de C.V.

Coca-Cola FEMSA, S.A.B. de C.V. is a franchise bottler of Coca-Cola trademark beverages across the world. The Company and its subsidiaries are engaged in the production, distribution and marketing of certain Coca-Cola beverages. It is also engaged in acquiring, holding and transferring all types of bonds, shares and marketable securities. The Company’s segments include Mexico and Central America division, which comprises Mexico (including corporate operations), Guatemala, Nicaragua, Costa Rica and Panama; the South America division, which consists of Brazil, Argentina and Colombia; Venezuela, which operates in an economy with exchange control and hyper-inflation, and the Asian division, which consists of the Company’s equity method investment in Coca-Cola FEMSA Philippines, Inc. The Coca-Cola trademark beverages include sparkling beverages (colas and flavored sparkling beverages), waters and still beverages (including juice drinks, coffee, teas, milk, dairy and isotonic drinks).

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