The quarterly results for Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) were released last week, making it a good time to revisit its performance. Revenues were in line with forecasts, at Mex$45b, although statutory earnings per share came in 20% below what the analysts expected, at Mex$10.45 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Coca-Cola FEMSA. de after the latest results.
Following last week's earnings report, Coca-Cola FEMSA. de's 17 analysts are forecasting 2020 revenues to be Mex$190.5b, approximately in line with the last 12 months. Statutory earnings per share are predicted to increase 2.4% to Mex$52.03. Before this earnings report, the analysts had been forecasting revenues of Mex$183.8b and earnings per share (EPS) of Mex$48.44 in 2020. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.
Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of US$54.71, suggesting that the forecast performance does not have a long term impact on the company's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Coca-Cola FEMSA. de at US$68.00 per share, while the most bearish prices it at US$45.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Coca-Cola FEMSA. de's revenue growth is expected to slow, with forecast 1.1% increase next year well below the historical 5.5%p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.3% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Coca-Cola FEMSA. de.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Coca-Cola FEMSA. de following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. The consensus price target held steady at Mex$54.71, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Coca-Cola FEMSA. de going out to 2024, and you can see them free on our platform here..
You still need to take note of risks, for example - Coca-Cola FEMSA. de has 2 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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