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Coca-Cola Femsa SAB de CV ADR KOF

Morningstar Rating
$100.41 −0.29 (0.29%)
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Company Report

Coca-Cola Femsa Earnings: Strong Volume and Pricing, Digital Investment a Long-Term Upside

Wide-moat bottler Coke Femsa reported increases of 8% and 11% in 2023 sales and operating profits, respectively, matching our estimates. Excluding currency headwinds, volumes were up 8% and underlying pricing up 10%, which we view as a healthy mix that exemplifies the strength of the Coke brands and the bottler’s in-market execution expertise. For 2024, strong demand in Mexico and Brazil should support a mid-single-digit volume expansion, and we continue to see our 10-year projections for a 6% sales compound annual growth rate and 14% average operating margins as attainable. We plan to maintain our $94 fair value estimate.

Price vs Fair Value

KOF is trading at a 7% premium.
Price
$100.41
Fair Value
$13.00
Uncertainty
Medium
1-Star Price
$625.50
5-Star Price
$67.10
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Coca-Cola Femsa can leverage strong retail relationships to drive volume growth in under-penetrated markets across Latin America, tapping soft-drink demand with classic recipes and new products tailored to local tastes.

Bears

Lower discretionary spending levels and less-developed transportation infrastructure in Latin America remain hurdles to the bottler’s efforts to increase consumption of Coke products.

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Trading Information

Previous Close Price
$100.70
Day Range
$98.57101.45
52-Week Range
$69.34104.38
Bid/Ask
$96.00 / $104.14
Market Cap
$21.09 Bil
Volume/Avg
141,318 / 143,086

Key Statistics

Price/Earnings (Normalized)
17.47
Price/Sales
1.56
Dividend Yield (Trailing)
3.26%
Dividend Yield (Forward)
3.28%
Total Yield
3.26%

Company Profile

Coca-Cola Femsa, a subsidiary of Femsa, is the largest franchise bottler of wide-moat Coca-Cola in unit case volume terms. The company purchases beverage concentrates and syrup from Coca-Cola, which it then processes and packages for distribution through on-trade and off-trade channels, including retailers and food-service providers. Mexico and Brazil make up 80% of total sales for Coca-Cola Femsa, with the rest from other Central and South American countries, including Panama, Guatemala, Uruguay, and Argentina. Parent Femsa and Coca-Cola hold 47% and 28% of economic interests in Coca-Cola Femsa, through nonpublicly traded A and D shares, respectively, while controlling 56% and 33% of the respective voting rights.
Sector
Consumer Defensive
Industry
Beverages - Non-Alcoholic
Stock Style Box
Large Core
Total Number of Employees
80,000

Competitors

Valuation

Metric
KOF
KDP
ABEV
Price/Earnings (Normalized)
17.4717.8711.92
Price/Book Value
2.911.712.31
Price/Sales
1.562.982.50
Price/Cash Flow
14.768.45
Price/Earnings
KOF
KDP
ABEV

Financial Strength

Metric
KOF
KDP
ABEV
Quick Ratio
0.900.200.75
Current Ratio
1.230.381.11
Interest Coverage
6.066.569.93
Quick Ratio
KOF
KDP
ABEV

Profitability

Metric
KOF
KDP
ABEV
Return on Assets (Normalized)
7.88%4.86%11.30%
Return on Equity (Normalized)
17.58%9.95%18.12%
Return on Invested Capital (Normalized)
11.20%7.37%16.62%
Return on Assets
KOF
KDP
ABEV
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Beverages - Non-Alcoholic Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
KO
Coca-Cola CoZlt$263.7 Bil
PEP
PepsiCo IncDnhx$231.2 Bil
NNFSF
Nongfu Spring Co Ltd Class H Ordinary SharesZnwjq$64.6 Bil
MNST
Monster Beverage CorpMbrxm$57.3 Bil
KDP
Keurig Dr Pepper IncGssnwh$42.5 Bil
CCEP
Coca-Cola Europacific Partners PLCMhmgj$31.3 Bil
COCSF
Coca-Cola Femsa SAB de CV Series LRqbv$22.7 Bil
CELH
Celsius Holdings IncKvrt$14.9 Bil
PRMW
Primo Water CorpCwgw$2.4 Bil

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