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Prosperity Bancshares Inc. Message Board

  • greengrow greengrow Feb 25, 1998 10:22 AM Flag

    Poorboy is right!

    Doesn't anyone love this stock? My two favorite stocks are PB and FLH. This message board is dead! Wake up!! PB is a much larger company than KOF and they both play in the same sandboxes. Why does KOF have more action on its message board than PB? Send those messages in now!!

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    • PB's sandbox is actually much bigger than KOF's. But, in the past, KOF did appear to be better known to analysts in this country and appeared better able to market itself to the Street. Perhaps the proximity factor, given that the bulk of KOF's operations are in Mexico?

      But this has changed recently. And in any event, I hadn't noticed KOF's board being particularly active (though I admit this one is close to moribund). PB has gotten some (extremely favorable) popular press and expanded analyst coverage. In case you're concerned, PB easily comes out ahead in any comparison between the two companies, right now. PB is a much stronger, better managed company with brilliant prospects and is trading at a much lower P/E than its peer group.

      One of the things keeping PB down is continued uncertainty over Brazil. In 1996 (before the Venezuala acquisition), the
      Brazilian territories accounted for about two fifths of revenue. So there is still large exposure there. And people are nervous about
      the developing world, these days, particularly in light of the Asia crisis. Mexico, itself, instills some degree of confidence
      (relative to the rest of the region), especially since the U.S. has demonstrated a willingness to bail it out. Again, KOF has a higher
      percentage of its operations in Mexico. Until we see confidence in Brazil restored, I suspect we'll continue to meet stiff resistence
      at 40. But the stock has shown strong support at 30, when the market was fleeing anything foreign, and has rebounded back to
      the mid-high 30s each time, fairly quickly. Management consistently been able to meet or beat earnings estimates, despite
      problems with the Brazilian economy. <Poorboy, this is my take on why its gravitated toward the mid thirties for awhile>

      I have no idea what EV/EBITDA is. Sorry.

      I'm not sure which Mexican bottlers you are referring to. PB did buy out some of the minority shareholders in some of the Mexican territories.

      When you talk about KOF and PB merging because they are both operating in the same region, keep in mind that they both are comprised of a set of distinct, discrete territories. They are not direct competitors, except, perhaps, in the sense that they might like to have the franchise(s) in the others territory. For all I know, they may even cooperate, together with Coke, on areas of common interest (e.g., advertising, legislative affairs, supplier QA).

      I don't see why Coke would necessarily want these two to merge, unless Coke was somehow able to increase its stake in the
      operations (something Coke probably would like to do, but something that might not be in us shareholders LT best interests). While Coke
      might find it easier to deal with fewer, bigger, more effective bottlers, at some point, any economies of scale would have to be
      offset by political considerations, such as who is in the power position in the inevitable intra-family conflicts between: a) Coke
      and one of its large regional bottlers; or b) Coke and its sole bottler in Latin America.

      While I think this is one of the best long-term holds out there, I think the 20% run-up we've had recently might continue to 40ish given the increased visibility the stock is receiving and the renewed interest in a still growing Latin America.

 
PB
61.56+0.28(+0.46%)Apr 17 4:02 PMEDT

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