The Zacks Analyst Blog Highlights: Fomento Economico Mexicano, Coca-Cola, Coca-Cola Enterprises, Coffee Holding and GameStop

Zacks

For Immediate Release

Chicago, IL – October 03, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Fomento Economico Mexicano S.A.B de C.V. (FMX-Free Report), The Coca-Cola Company (KO-Free Report), Coca-Cola Enterprises Inc. (CCE-Free Report), Coffee Holding Company Inc. (JVA-Free Report) and GameStop Corp. (GME-Free Report).
 
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Wednesday’s Analyst Blog:

FEMSA Downgraded to Underperform
 
On Sep 26, 2013, we downgraded the Latin American beverage company, Fomento Economico Mexicano S.A.B de C.V. (FMX-Free Report), to Underperform based on lower-than-expected bottom-line results in the past two quarters.

Why the Downgrade?

Estimates for FEMSA, the largest franchise bottler for The Coca-Cola Company (KO-Free Report), have been declining since it reported second-quarter results on Jul 25. FEMSA’s second-quarter fiscal 2013 earnings of $0.78 per share fell short of the Zacks Consensus Estimate of $1.22.

Following the release of second-quarter results, the Zacks Consensus Estimate for fiscal 2013 has gone down 3.6% to $4.02 per share. The Zacks Consensus Estimate for fiscal 2014 also declined 3.8% to $4.76. With the Zacks Consensus Estimates for both fiscal 2013 and 2014 going down, the company now has a Zacks #4 Rank (Sell).

Cause for Concern

Apart from the earnings decline, we remain cautious on the stock’s future performance as FEMSA witnessed a meager rise of 0.9% in comparable-store sales of its OXXO stores, which exhibited the lowest growth since 2009. Moreover, the company has witnessed a fall in customer traffic during the quarter, for the first time since 2003.
 
Moreover, stiff competition from private players and rising commodity costs compel us to take a negative stance on the stock. In addition, the company’s premium valuation limits the upside potential in the stock.

Given that The Coca-Cola Company has a 31.6% stake in the company, Coca-Cola FEMSA derives 90% of its sales from the former’s trademark beverages.  This gives The Coca-Cola Company a significant advantage over the company’s operations.  Thus, there may be a certain conflict of interest between the two companies, which may result in Coca-Cola FEMSA taking actions, which can be detrimental to the interests of its remaining shareholders.

Other Stocks to Consider

Other stocks worth considering in the beverage industry are Coca-Cola Enterprises Inc. (CCE-Free Report) and Coffee Holding Company Inc. (JVA-Free Report). Coca-Cola Enterprises has a Zacks Rank #2 (Buy), while Coffee Holding Company carries a Zacks Rank #3 (Hold).
 
GameStop to Hire 17,000 Seasonal Staff
 
Multichannel retailer of video games, GameStop Corp. (GME-Free Report) would hire about 17,000 seasonal employees nationwide to assist in the upcoming launches of PlayStation 4 and Xbox One console as well as to cater to the busy holiday shopping season. The company had recruited nearly an equal number of employees during the same time period last year.

The highly awaited launch of PS4 and XBOX is scheduled for Nov 15 and Nov 22, respectively. GameStop expects to benefit hugely from the release of these two consoles. Further, the company experiences a rise in demand that continues through the holidays. Therefore, the company is leaving no stone unturned to exploit these opportunities and is thereby hiring enough employees to assist customers and enhance their shopping experience.

GameStop is seeking to appoint in-store Game Advisors, warehouse personnel for its two distribution centers and consumer electronic technicians for its refurbishment operation center (ROC).

GameStop’s recruitment has already started and will continue up to December. Applicants need to check out the company’s’ website and its pages on LinkedIn, Facebook and Twitter for the available jobs, descriptions, qualifications required and other application details.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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