Coca-Cola FEMSA, S.A.B. de C.V. Just Missed Earnings - But Analysts Have Updated Their Models
Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF) shareholders are probably feeling a little disappointed, since its shares fell 2.6% to US$40.66 in the week after its latest quarterly results. It was not a great result overall. Although revenues beat expectations, hitting US$49b, statutory earnings missed analyst forecasts by 12%, coming in at just US$12.38 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Check out our latest analysis for Coca-Cola FEMSA. de
Following the recent earnings report, the consensus from 17 analysts covering Coca-Cola FEMSA. de is for revenues of US$9.22b in 2021, implying a substantial 95% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to nosedive 95% to US$2.78 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$188.8b and earnings per share (EPS) of US$56.85 in 2021. It looks like sentiment has declined substantially in the aftermath of these results, with a large cut to revenue estimates and a pretty serious reduction to earnings per share numbers as well.
The analysts made no major changes to their price target of US$60.70, suggesting the downgrades are not expected to have a long-term impact on Coca-Cola FEMSA. de's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Coca-Cola FEMSA. de at US$116 per share, while the most bearish prices it at US$45.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 95% revenue decline a notable change from historical growth of 5.0% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.2% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Coca-Cola FEMSA. de is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the negative side, they also downgraded their revenue estimates, and forecasts imply revenues will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Coca-Cola FEMSA. de analysts - going out to 2024, and you can see them free on our platform here.
Even so, be aware that Coca-Cola FEMSA. de is showing 3 warning signs in our investment analysis , and 1 of those is a bit concerning...
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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