Critical Analysis: Pepsico (PEP) & Fomento Economico Mexicano SAB (FMX)

Pepsico (NASDAQ: PEP) and Fomento Economico Mexicano SAB (NYSE:FMX) are both large-cap non-cyclical consumer goods & services companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.

Valuation and Earnings

This table compares Pepsico and Fomento Economico Mexicano SAB’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pepsico $62.80 billion 2.70 $6.33 billion $4.84 24.62
Fomento Economico Mexicano SAB $21.44 billion 1.61 $1.03 billion $6.86 14.08

Pepsico has higher revenue and earnings than Fomento Economico Mexicano SAB. Fomento Economico Mexicano SAB is trading at a lower price-to-earnings ratio than Pepsico, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Pepsico has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500. Comparatively, Fomento Economico Mexicano SAB has a beta of 0.54, meaning that its share price is 46% less volatile than the S&P 500.

Profitability

This table compares Pepsico and Fomento Economico Mexicano SAB’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pepsico 10.97% 59.68% 9.70%
Fomento Economico Mexicano SAB 10.91% 17.30% 9.18%

Dividends

Pepsico pays an annual dividend of $3.22 per share and has a dividend yield of 2.7%. Fomento Economico Mexicano SAB pays an annual dividend of $1.35 per share and has a dividend yield of 1.4%. Pepsico pays out 66.5% of its earnings in the form of a dividend. Fomento Economico Mexicano SAB pays out 19.7% 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.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Pepsico and Fomento Economico Mexicano SAB, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pepsico 0 7 7 0 2.50
Fomento Economico Mexicano SAB 0 2 4 0 2.67

Pepsico presently has a consensus price target of $122.33, indicating a potential upside of 2.65%. Fomento Economico Mexicano SAB has a consensus price target of $115.75, indicating a potential upside of 19.80%. Given Fomento Economico Mexicano SAB’s stronger consensus rating and higher probable upside, analysts plainly believe Fomento Economico Mexicano SAB is more favorable than Pepsico.

Insider & Institutional Ownership

70.2% of Pepsico shares are owned by institutional investors. Comparatively, 21.2% of Fomento Economico Mexicano SAB shares are owned by institutional investors. 0.3% of Pepsico shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Pepsico beats Fomento Economico Mexicano SAB on 12 of the 16 factors compared between the two stocks.

Pepsico Company Profile

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.

Fomento Economico Mexicano SAB Company Profile

Fomento Economico Mexicano, S.A.B. de C.V. (FEMSA) is a holding company. The Company’s segments are Coca-Cola FEMSA, FEMSA Comercio-Retail Division and FEMSA Comercio-Fuel Division. The Company conducts its operations through holding companies, such as Coca-Cola FEMSA, S.A.B. de C.V. and subsidiaries (Coca-Cola FEMSA), which produces, distributes and sells beverages; FEMSA Comercio, S.A. de C.V. and subsidiaries (FEMSA Comercio), which consists of a Retail Division operating various small-format chain stores, and CB Equity LLP, which holds its equity investment in Heineken N.V., and Heineken Holding N.V. The Company’s Coca-Cola FEMSA produces, markets, sells and distributes Coca-Cola trademark beverages through standard bottler agreements in certain territories in the countries, in which it operates. Coca-Cola FEMSA also sells bottled water products. FEMSA participates in the retail sector primarily through FEMSA Comercio.

Receive News & Ratings for Pepsico Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Pepsico and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply