Intrinsic value of Coca-Cola Femsa ADR - KOF

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$79.17

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$79.17

 
Intrinsic value

$203.13

 
Up/down potential

+157%

 
Rating

str. buy

 
Value-price divergence* premium content

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*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of KOF stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 5.4

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  16.63
  21.60
  19.94
  18.45
  17.10
  15.89
  14.80
  13.82
  12.94
  12.15
  11.43
  10.79
  10.21
  9.69
  9.22
  8.80
  8.42
  8.08
  7.77
  7.49
  7.24
  7.02
  6.82
  6.63
  6.47
  6.32
  6.19
  6.07
  5.97
  5.87
  5.78
Revenue, $m
  9,004
  10,949
  13,132
  15,554
  18,214
  21,109
  24,234
  27,583
  31,152
  34,936
  38,929
  43,129
  47,532
  52,137
  56,944
  61,954
  67,169
  72,594
  78,233
  84,094
  90,184
  96,514
  103,092
  109,932
  117,046
  124,448
  132,154
  140,179
  148,541
  157,259
  166,351
Variable operating expenses, $m
 
  9,333
  11,169
  13,205
  15,442
  17,875
  20,502
  23,318
  26,319
  29,500
  32,857
  36,259
  39,961
  43,832
  47,873
  52,085
  56,470
  61,030
  65,771
  70,698
  75,819
  81,140
  86,670
  92,421
  98,402
  104,625
  111,103
  117,849
  124,879
  132,208
  139,853
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  7,971
  9,333
  11,169
  13,205
  15,442
  17,875
  20,502
  23,318
  26,319
  29,500
  32,857
  36,259
  39,961
  43,832
  47,873
  52,085
  56,470
  61,030
  65,771
  70,698
  75,819
  81,140
  86,670
  92,421
  98,402
  104,625
  111,103
  117,849
  124,879
  132,208
  139,853
Operating income, $m
  1,033
  1,615
  1,963
  2,349
  2,773
  3,234
  3,732
  4,265
  4,834
  5,436
  6,073
  6,870
  7,572
  8,305
  9,071
  9,869
  10,700
  11,564
  12,462
  13,396
  14,366
  15,374
  16,422
  17,512
  18,645
  19,824
  21,051
  22,330
  23,662
  25,050
  26,499
EBITDA, $m
  1,472
  2,185
  2,621
  3,104
  3,635
  4,212
  4,836
  5,504
  6,217
  6,972
  7,769
  8,607
  9,485
  10,404
  11,364
  12,363
  13,404
  14,486
  15,612
  16,781
  17,997
  19,260
  20,573
  21,938
  23,357
  24,834
  26,372
  27,973
  29,642
  31,382
  33,196
Interest expense (income), $m
  209
  236
  321
  417
  523
  639
  766
  903
  1,049
  1,206
  1,371
  1,546
  1,730
  1,923
  2,125
  2,335
  2,555
  2,783
  3,020
  3,267
  3,524
  3,791
  4,068
  4,356
  4,656
  4,967
  5,291
  5,629
  5,980
  6,346
  6,728
Earnings before tax, $m
  732
  1,379
  1,642
  1,932
  2,250
  2,595
  2,966
  3,362
  3,784
  4,231
  4,701
  5,324
  5,841
  6,382
  6,946
  7,534
  8,145
  8,781
  9,442
  10,128
  10,842
  11,583
  12,354
  13,155
  13,989
  14,857
  15,760
  16,701
  17,682
  18,704
  19,771
Tax expense, $m
  199
  372
  443
  522
  608
  701
  801
  908
  1,022
  1,142
  1,269
  1,437
  1,577
  1,723
  1,875
  2,034
  2,199
  2,371
  2,549
  2,735
  2,927
  3,127
  3,336
  3,552
  3,777
  4,011
  4,255
  4,509
  4,774
  5,050
  5,338
Net income, $m
  510
  1,007
  1,199
  1,411
  1,643
  1,894
  2,165
  2,455
  2,762
  3,088
  3,432
  3,886
  4,264
  4,659
  5,071
  5,500
  5,946
  6,410
  6,892
  7,394
  7,914
  8,456
  9,018
  9,603
  10,212
  10,845
  11,505
  12,192
  12,908
  13,654
  14,433

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  607
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  14,149
  16,464
  19,747
  23,390
  27,390
  31,743
  36,441
  41,478
  46,845
  52,535
  58,541
  64,856
  71,477
  78,402
  85,630
  93,164
  101,006
  109,163
  117,644
  126,457
  135,616
  145,133
  155,026
  165,312
  176,010
  187,141
  198,728
  210,796
  223,370
  236,479
  250,152
Adjusted assets (=assets-cash), $m
  13,542
  16,464
  19,747
  23,390
  27,390
  31,743
  36,441
  41,478
  46,845
  52,535
  58,541
  64,856
  71,477
  78,402
  85,630
  93,164
  101,006
  109,163
  117,644
  126,457
  135,616
  145,133
  155,026
  165,312
  176,010
  187,141
  198,728
  210,796
  223,370
  236,479
  250,152
Revenue / Adjusted assets
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
  0.665
Average production assets, $m
  5,544
  6,745
  8,089
  9,582
  11,220
  13,003
  14,928
  16,991
  19,190
  21,521
  23,981
  26,568
  29,280
  32,117
  35,078
  38,164
  41,376
  44,718
  48,192
  51,802
  55,554
  59,452
  63,505
  67,718
  72,101
  76,660
  81,407
  86,350
  91,501
  96,871
  102,472
Working capital, $m
  283
  -120
  -144
  -171
  -200
  -232
  -267
  -303
  -343
  -384
  -428
  -474
  -523
  -574
  -626
  -681
  -739
  -799
  -861
  -925
  -992
  -1,062
  -1,134
  -1,209
  -1,288
  -1,369
  -1,454
  -1,542
  -1,634
  -1,730
  -1,830
Total debt, $m
  4,854
  6,294
  8,169
  10,249
  12,533
  15,018
  17,701
  20,577
  23,642
  26,891
  30,320
  33,926
  37,707
  41,661
  45,788
  50,090
  54,568
  59,225
  64,068
  69,100
  74,330
  79,764
  85,413
  91,286
  97,394
  103,750
  110,367
  117,257
  124,437
  131,923
  139,730
Total liabilities, $m
  7,961
  9,401
  11,276
  13,356
  15,640
  18,125
  20,808
  23,684
  26,749
  29,998
  33,427
  37,033
  40,814
  44,768
  48,895
  53,197
  57,675
  62,332
  67,175
  72,207
  77,437
  82,871
  88,520
  94,393
  100,501
  106,857
  113,474
  120,364
  127,544
  135,030
  142,837
Total equity, $m
  6,188
  7,063
  8,472
  10,034
  11,750
  13,618
  15,633
  17,794
  20,097
  22,538
  25,114
  27,823
  30,664
  33,635
  36,735
  39,967
  43,332
  46,831
  50,469
  54,250
  58,179
  62,262
  66,506
  70,919
  75,508
  80,283
  85,254
  90,431
  95,826
  101,450
  107,315
Total liabilities and equity, $m
  14,149
  16,464
  19,748
  23,390
  27,390
  31,743
  36,441
  41,478
  46,846
  52,536
  58,541
  64,856
  71,478
  78,403
  85,630
  93,164
  101,007
  109,163
  117,644
  126,457
  135,616
  145,133
  155,026
  165,312
  176,009
  187,140
  198,728
  210,795
  223,370
  236,480
  250,152
Debt-to-equity ratio
  0.784
  0.890
  0.960
  1.020
  1.070
  1.100
  1.130
  1.160
  1.180
  1.190
  1.210
  1.220
  1.230
  1.240
  1.250
  1.250
  1.260
  1.260
  1.270
  1.270
  1.280
  1.280
  1.280
  1.290
  1.290
  1.290
  1.290
  1.300
  1.300
  1.300
  1.300
Adjusted equity ratio
  0.412
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429
  0.429

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  510
  1,007
  1,199
  1,411
  1,643
  1,894
  2,165
  2,455
  2,762
  3,088
  3,432
  3,886
  4,264
  4,659
  5,071
  5,500
  5,946
  6,410
  6,892
  7,394
  7,914
  8,456
  9,018
  9,603
  10,212
  10,845
  11,505
  12,192
  12,908
  13,654
  14,433
Depreciation, amort., depletion, $m
  439
  570
  657
  755
  862
  979
  1,104
  1,239
  1,383
  1,535
  1,696
  1,736
  1,914
  2,099
  2,293
  2,494
  2,704
  2,923
  3,150
  3,386
  3,631
  3,886
  4,151
  4,426
  4,712
  5,010
  5,321
  5,644
  5,980
  6,331
  6,698
Funds from operations, $m
  1,894
  1,576
  1,856
  2,166
  2,505
  2,873
  3,269
  3,694
  4,145
  4,624
  5,128
  5,623
  6,178
  6,758
  7,363
  7,994
  8,650
  9,333
  10,042
  10,779
  11,545
  12,342
  13,169
  14,030
  14,925
  15,856
  16,826
  17,835
  18,888
  19,985
  21,130
Change in working capital, $m
  250
  -21
  -24
  -27
  -29
  -32
  -34
  -37
  -39
  -42
  -44
  -46
  -48
  -51
  -53
  -55
  -57
  -60
  -62
  -64
  -67
  -70
  -72
  -75
  -78
  -81
  -85
  -88
  -92
  -96
  -100
Cash from operations, $m
  1,644
  1,048
  1,880
  2,192
  2,534
  2,905
  3,304
  3,731
  4,185
  4,665
  5,172
  5,669
  6,226
  6,809
  7,416
  8,049
  8,708
  9,392
  10,104
  10,844
  11,612
  12,411
  13,241
  14,105
  15,003
  15,937
  16,910
  17,924
  18,980
  20,081
  21,230
Maintenance CAPEX, $m
  0
  -362
  -441
  -529
  -626
  -733
  -850
  -976
  -1,111
  -1,254
  -1,407
  -1,567
  -1,736
  -1,914
  -2,099
  -2,293
  -2,494
  -2,704
  -2,923
  -3,150
  -3,386
  -3,631
  -3,886
  -4,151
  -4,426
  -4,712
  -5,010
  -5,321
  -5,644
  -5,980
  -6,331
New CAPEX, $m
  -643
  -1,201
  -1,345
  -1,492
  -1,639
  -1,783
  -1,925
  -2,063
  -2,199
  -2,331
  -2,460
  -2,587
  -2,712
  -2,837
  -2,961
  -3,086
  -3,213
  -3,342
  -3,474
  -3,610
  -3,752
  -3,899
  -4,052
  -4,213
  -4,382
  -4,560
  -4,747
  -4,943
  -5,151
  -5,370
  -5,601
Cash from investing activities, $m
  -1,364
  -1,563
  -1,786
  -2,021
  -2,265
  -2,516
  -2,775
  -3,039
  -3,310
  -3,585
  -3,867
  -4,154
  -4,448
  -4,751
  -5,060
  -5,379
  -5,707
  -6,046
  -6,397
  -6,760
  -7,138
  -7,530
  -7,938
  -8,364
  -8,808
  -9,272
  -9,757
  -10,264
  -10,795
  -11,350
  -11,932
Free cash flow, $m
  280
  -515
  95
  171
  269
  388
  529
  692
  876
  1,080
  1,305
  1,515
  1,778
  2,058
  2,356
  2,670
  3,001
  3,346
  3,708
  4,084
  4,475
  4,881
  5,303
  5,741
  6,195
  6,665
  7,153
  7,660
  8,185
  8,731
  9,298
Issuance/(repayment) of debt, $m
  157
  1,666
  1,875
  2,080
  2,284
  2,485
  2,683
  2,876
  3,065
  3,249
  3,429
  3,606
  3,781
  3,954
  4,127
  4,302
  4,478
  4,658
  4,842
  5,032
  5,230
  5,435
  5,649
  5,873
  6,108
  6,356
  6,616
  6,891
  7,180
  7,485
  7,807
Issuance/(repurchase) of shares, $m
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -138
  1,666
  1,875
  2,080
  2,284
  2,485
  2,683
  2,876
  3,065
  3,249
  3,429
  3,606
  3,781
  3,954
  4,127
  4,302
  4,478
  4,658
  4,842
  5,032
  5,230
  5,435
  5,649
  5,873
  6,108
  6,356
  6,616
  6,891
  7,180
  7,485
  7,807
Total cash flow (excl. dividends), $m
  76
  1,151
  1,969
  2,251
  2,553
  2,874
  3,212
  3,568
  3,940
  4,329
  4,734
  5,121
  5,558
  6,012
  6,483
  6,972
  7,479
  8,004
  8,550
  9,116
  9,704
  10,316
  10,952
  11,614
  12,303
  13,021
  13,770
  14,550
  15,365
  16,216
  17,105
Retained Cash Flow (-), $m
  -881
  -1,256
  -1,408
  -1,563
  -1,716
  -1,867
  -2,016
  -2,161
  -2,303
  -2,441
  -2,576
  -2,709
  -2,841
  -2,971
  -3,101
  -3,232
  -3,364
  -3,499
  -3,638
  -3,781
  -3,929
  -4,083
  -4,244
  -4,413
  -4,589
  -4,775
  -4,971
  -5,177
  -5,394
  -5,624
  -5,866
Prev. year cash balance distribution, $m
 
  381
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  276
  561
  689
  837
  1,006
  1,196
  1,407
  1,638
  1,888
  2,158
  2,411
  2,718
  3,042
  3,383
  3,740
  4,114
  4,505
  4,912
  5,335
  5,775
  6,233
  6,708
  7,201
  7,714
  8,246
  8,799
  9,373
  9,971
  10,592
  11,239
Discount rate, %
 
  6.20
  6.51
  6.84
  7.18
  7.54
  7.91
  8.31
  8.72
  9.16
  9.62
  10.10
  10.60
  11.13
  11.69
  12.28
  12.89
  13.53
  14.21
  14.92
  15.67
  16.45
  17.27
  18.14
  19.04
  20.00
  21.00
  22.05
  23.15
  24.30
  25.52
PV of cash for distribution, $m
 
  260
  494
  565
  634
  700
  757
  805
  839
  858
  861
  837
  811
  771
  719
  659
  591
  521
  449
  380
  314
  255
  201
  156
  118
  87
  62
  43
  29
  19
  12
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Coca-Cola FEMSA, S.A.B. de C.V., a franchise bottler, produces, markets, sells, and distributes Coca-Cola trademark beverages. The company offers sparkling beverages, including colas and flavored sparkling beverages; and waters and still beverages comprising juice drinks, coffee, teas, milk, value-added dairy, and isotonic drinks, as well as sells and distributes beer. It sells its products through distribution centers and retailers in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil, Argentina, and the Philippines. The company was founded in 1979 and is based in Mexico, Mexico.

FINANCIAL RATIOS  of  Coca-Cola Femsa ADR (KOF)

Valuation Ratios
P/E Ratio 321.8
Price to Sales 18.2
Price to Book 26.5
Price to Tangible Book
Price to Cash Flow 99.8
Price to Free Cash Flow 163.9
Growth Rates
Sales Growth Rate 16.6%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 10.3%
Cap. Spend. - 3 Yr. Gr. Rate 1.4%
Financial Strength
Quick Ratio 3
Current Ratio 0.1
LT Debt to Equity 74.8%
Total Debt to Equity 78.4%
Interest Coverage 5
Management Effectiveness
Return On Assets 5.3%
Ret/ On Assets - 3 Yr. Avg. 5.8%
Return On Total Capital 5.2%
Ret/ On T. Cap. - 3 Yr. Avg. 5.7%
Return On Equity 8.9%
Return On Equity - 3 Yr. Avg. 9.4%
Asset Turnover 0.7
Profitability Ratios
Gross Margin 44.8%
Gross Margin - 3 Yr. Avg. 46.2%
EBITDA Margin 15.3%
EBITDA Margin - 3 Yr. Avg. 16.4%
Operating Margin 11.5%
Oper. Margin - 3 Yr. Avg. 13.5%
Pre-Tax Margin 8.1%
Pre-Tax Margin - 3 Yr. Avg. 9.3%
Net Profit Margin 5.7%
Net Profit Margin - 3 Yr. Avg. 6.5%
Effective Tax Rate 27.2%
Eff/ Tax Rate - 3 Yr. Avg. 27.9%
Payout Ratio 69.6%

KOF stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the KOF stock intrinsic value calculation we used $9004 million for the last fiscal year's total revenue generated by Coca-Cola Femsa ADR. The default revenue input number comes from 2016 income statement of Coca-Cola Femsa ADR. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our KOF stock valuation model: a) initial revenue growth rate of 21.6% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 6.2%, whose default value for KOF is calculated based on our internal credit rating of Coca-Cola Femsa ADR, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Coca-Cola Femsa ADR.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of KOF stock the variable cost ratio is equal to 85.5%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for KOF stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 5.1% for Coca-Cola Femsa ADR.

Corporate tax rate of 27% is the nominal tax rate for Coca-Cola Femsa ADR. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the KOF stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for KOF are equal to 61.6%.

Life of production assets of 15.3 years is the average useful life of capital assets used in Coca-Cola Femsa ADR operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for KOF is equal to -1.1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $6188 million for Coca-Cola Femsa ADR - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 68.061 million for Coca-Cola Femsa ADR is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Coca-Cola Femsa ADR at the current share price and the inputted number of shares is $5.4 billion.


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COMPANY NEWS

▶ Coca-Cola FEMSA Scraps Plans for US Operations   [May-16-17 06:18PM  Investopedia]
▶ Coca-Cola FEMSA CEO: Tax sugar, not soft drinks   [May-10-17 09:41AM  American City Business Journals]
▶ 2017 First Quarter Results   [09:10AM  Marketwired]
▶ 3 Mexico Experts: Peso Rises, Week In Review   [Feb-24-17 06:13PM  Barrons.com]
▶ 3 Mexico Experts: Peso Rises, Week In Review   [06:13PM  at Barrons.com]
▶ 2016 Fourth Quarter and Full Year Results   [08:30AM  Marketwired]
▶ Unilever Stock Rises: Would It Spin Off EU Assets?   [Feb-22-17 03:56PM  at Barrons.com]
▶ Coca-Cola FEMSA Fourth Quarter 2016 Conference Call   [Feb-07-17 04:20PM  Marketwired]
▶ Is Coca-Cola FEMSA, S.A.B. de C.V. (ADR) (KOF) a Good Buy?   [Dec-12-16 05:04PM  at Insider Monkey]
▶ Mexico Hikes Interest Rate, What's Next For Peso?   [Nov-18-16 10:04AM  at Barrons.com]
▶ Trump Could Dump Nafta: How To Invest In Mexico   [Nov-16-16 01:12PM  at Barrons.com]
▶ Brazil's Ambev Has 20% Upside, J.P. Morgan Says   [Nov-10-16 12:08PM  at Barrons.com]
▶ 2016 Third Quarter and First Nine Months Results   [Oct-25-16 04:05PM  Marketwired]
▶ What Coty Brings To S&P 500: Brazil Consumer   [Sep-28-16 09:16AM  at Barrons.com]
▶ Coke Brazil Purchase 'Unexpected,' Market Cheers   [Sep-23-16 04:33PM  at Barrons.com]
▶ Coca-Cola FEMSA Second Quarter 2016 Conference Call   [Jul-05-16 05:01PM  Marketwired]
▶ 2016 First Quarter Results   [Apr-27-16 08:30AM  Marketwired]
▶ COCA COLA FEMSA SAB DE CV Financials   [01:04PM  EDGAR Online Financials]
▶ 2015 Fourth Quarter and Full Year Results   [Feb-23-16 08:30AM  Marketwired]
▶ Coca-Cola FEMSA Announces Date for Shareholders' Meeting   [Feb-02-16 04:30PM  Marketwired]
▶ Coca-Cola FEMSA Fourth Quarter 2015 Conference Call   [Jan-25-16 09:37AM  at noodls]
Stock chart of KOF Financial statements of KOF Annual reports of KOF
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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