Zacks Investment Research downgraded
Coca-Cola FEMSA S.A.B de C.V.
) to a Zacks Rank #5 (Strong Sell) on March 15 after the company
reported soft fourth quarter 2013 results.
Why the Downgrade?
On Feb 26, Coca-Cola FEMSA S.A.B de C.V. also known as Femsa
posted lower-than-expected bottom-line results in the fourth
quarter of 2013. The largest franchise bottler for
The Coca-Cola Company
) reported earnings of $1.12 per share, which lagged the Zacks
Consensus Estimate of $1.57 per share by 28.7% due to a volatile
consumer environment, especially in Brazil and Mexico and the
adverse impact of currency fluctuations across its
Quarterly net consolidated income of the company fell nearly
44.2% to Ps. 6,754 million ($518.4 million) from the comparable
year-ago quarter income of Ps.12,106 million ($935.0 million).
The decrease was primarily due to higher cost of sales, increased
operating expenses, decline in Heineken's third-quarter 2013 net
income in which FEMSA has a 20% participation interest, and
increased financing expenses as a result of the recently issued
bonds by Coca-Cola FEMSA and FEMSA Comercio.
Though total revenue increased in the quarter, Femsa's gross
margin contracted 110 basis points (bps) to 43.1% primarily due
to higher input costs and freight costs in the South American
division and input cost pressure in Mexico operations as well.
Operating margin also contracted 150 bps to 13.8%, primarily due
to South American currency devaluation and increased operating
expenses. On an organic basis, operating income decreased 5.5%
year over year.
This beverage company witnessed sharp downward estimate
revisions after announcing fourth quarter results. The Zacks
Consensus Estimate declined 2.4% for 2014 and 0.7% for 2015 over
the past 30 days.
Other Stocks to Consider
Not all stocks are performing as poorly as Femsa.
Better-ranked stocks in the consumer staples sector include
Diamond Foods Inc.
Inventure Foods, Inc.
), both holding a Zacks Rank #2 (Buy).
DIAMOND FOODS (DMND): Free Stock Analysis
COCA COLA CO (KO): Free Stock Analysis Report
COCA-COLA FEMSA (KOF): Free Stock Analysis
INVENTURE FOODS (SNAK): Free Stock Analysis
To read this article on Zacks.com click here.