KOF - FEMSA's Mixed Second Quarter Isn't A Cause For Concern
2024-07-26 02:05:39 ET
Summary
- FEMSA's Q2 results were mixed, with strong performance from Coca-Cola FEMSA driving the upside and offsetting weaker results in other segments.
- Weaker growth from Oxxo this quarter isn't a major concern, as calendar effects (the timing of Holy Week) have a lot to do with it and margins continue to improve.
- Ongoing investments in digital and drugstores may irk some investors, but long-term growth opportunities in core businesses remain promising and worthy of further investment.
- FMX shares aren't tremendously undervalued, but mid-to-high single-digit growth can still support a fair value close to $130.
The theoretically defensive food and beverage sector hasn't really been all that defensive of late in Mexico, as companies like Arca Continental (EMBVF), Coca-Cola FEMSA (KOF), FEMSA (FMX), Grupo Soriana (OGZSY), and WalMex (WMMVY) have all had rather lackluster performances since my last update on FEMSA. While most of these names have managed to outperform the overall index in Mexico, they haven't exactly done well as investors have been much more cautious about the country since the presidential election and currency movements haven't helped either....
FEMSA's Mixed Second Quarter Isn't A Cause For Concern