Head to Head Survey: Coca Cola Femsa S.A.B. de C.V. (KOF) & Pepsico (PEP)

Coca Cola Femsa S.A.B. de C.V. (NYSE: KOF) and Pepsico (NYSE:PEP) are both large-cap consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, earnings, analyst recommendations, valuation and risk.

Dividends

Coca Cola Femsa S.A.B. de C.V. pays an annual dividend of $1.75 per share and has a dividend yield of 2.1%. Pepsico pays an annual dividend of $3.22 per share and has a dividend yield of 2.8%. Coca Cola Femsa S.A.B. de C.V. pays out 51.3% of its earnings in the form of a dividend. Pepsico pays out 68.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Pepsico has raised its dividend for 44 consecutive years. Pepsico is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Coca Cola Femsa S.A.B. de C.V. and Pepsico’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Coca Cola Femsa S.A.B. de C.V. 7.09% 10.72% 5.04%
Pepsico 10.77% 59.74% 9.72%

Insider and Institutional Ownership

7.0% of Coca Cola Femsa S.A.B. de C.V. shares are held by institutional investors. Comparatively, 70.5% of Pepsico shares are held by institutional investors. 1.0% of Coca Cola Femsa S.A.B. de C.V. shares are held by insiders. Comparatively, 0.3% of Pepsico shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Coca Cola Femsa S.A.B. de C.V. and Pepsico’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Coca Cola Femsa S.A.B. de C.V. $11.22 billion 0.39 $2.11 billion $3.41 24.19
Pepsico $63.30 billion 2.62 $12.42 billion $4.72 24.68

Pepsico has higher revenue and earnings than Coca Cola Femsa S.A.B. de C.V.. Coca Cola Femsa S.A.B. de C.V. is trading at a lower price-to-earnings ratio than Pepsico, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Coca Cola Femsa S.A.B. de C.V. and Pepsico, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Coca Cola Femsa S.A.B. de C.V. 0 2 3 0 2.60
Pepsico 0 4 11 0 2.73

Coca Cola Femsa S.A.B. de C.V. currently has a consensus price target of $98.33, suggesting a potential upside of 19.19%. Pepsico has a consensus price target of $123.09, suggesting a potential upside of 5.65%. Given Coca Cola Femsa S.A.B. de C.V.’s higher possible upside, research analysts plainly believe Coca Cola Femsa S.A.B. de C.V. is more favorable than Pepsico.

Volatility and Risk

Coca Cola Femsa S.A.B. de C.V. has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500. Comparatively, Pepsico has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.

Summary

Pepsico beats Coca Cola Femsa S.A.B. de C.V. on 13 of the 17 factors compared between the two stocks.

About Coca Cola Femsa S.A.B. de C.V.

Coca-Cola FEMSA, S.A.B. de C.V. is a franchise bottler of Coca-Cola trademark beverages across the world. The Company and its subsidiaries are engaged in the production, distribution and marketing of certain Coca-Cola beverages. It is also engaged in acquiring, holding and transferring all types of bonds, shares and marketable securities. The Company’s segments include Mexico and Central America division, which comprises Mexico (including corporate operations), Guatemala, Nicaragua, Costa Rica and Panama; the South America division, which consists of Brazil, Argentina and Colombia; Venezuela, which operates in an economy with exchange control and hyper-inflation, and the Asian division, which consists of the Company’s equity method investment in Coca-Cola FEMSA Philippines, Inc. The Coca-Cola trademark beverages include sparkling beverages (colas and flavored sparkling beverages), waters and still beverages (including juice drinks, coffee, teas, milk, dairy and isotonic drinks).

About Pepsico

PepsiCo, Inc. is a global food and beverage company. The Company’s portfolio of brands includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. The Company operates through six segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), North America Beverages (NAB), Latin America, Europe Sub-Saharan Africa (ESSA), and Asia, Middle East and North Africa (AMENA). The FLNA segment includes its branded food and snack businesses in the United States and Canada. The QFNA segment includes its cereal, rice, pasta and other branded food businesses in the United States and Canada. The NAB segment includes its beverage businesses in the United States and Canada. The Latin America segment includes its beverage, food and snack businesses in Latin America. The ESSA segment includes its beverage, food and snack businesses in Europe and Sub-Saharan Africa. The AMENA segment includes its beverage, food and snack businesses in Asia, Middle East and North Africa.

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