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Are Investors Undervaluing Coca-Cola FEMSA (KOF) Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Coca-Cola FEMSA (KOF) is a stock many investors are watching right now. KOF is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 16.95, which compares to its industry's average of 25.07. Over the last 12 months, KOF's Forward P/E has been as high as 20.20 and as low as 14.99, with a median of 17.13.

We also note that KOF holds a PEG ratio of 1.86. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. KOF's PEG compares to its industry's average PEG of 2.78. Within the past year, KOF's PEG has been as high as 2.05 and as low as 1.52, with a median of 1.83.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. KOF has a P/S ratio of 1.36. This compares to its industry's average P/S of 1.39.

Finally, investors will want to recognize that KOF has a P/CF ratio of 7.79. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 22.26. Within the past 12 months, KOF's P/CF has been as high as 11.74 and as low as 6.85, with a median of 10.05.

These are only a few of the key metrics included in Coca-Cola FEMSA's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, KOF looks like an impressive value stock at the moment.


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Coca Cola Femsa S.A.B. de C.V. (KOF) : Free Stock Analysis Report
 
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