Intrinsic value of Coca-Cola Femsa ADR - KOF

Previous Close

$68.74

  Intrinsic Value

$154.26

stock screener

  Rating & Target

str. buy

+124%

Previous close

$68.74

 
Intrinsic value

$154.26

 
Up/down potential

+124%

 
Rating

str. buy

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 5.0

 

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
  16.60
  15.44
  14.40
  13.46
  12.61
  11.85
  11.16
  10.55
  9.99
  9.49
  9.04
  8.64
  8.28
  7.95
  7.65
  7.39
  7.15
  6.93
  6.74
  6.57
  6.41
  6.27
  6.14
  6.03
  5.93
  5.83
  5.75
  5.67
  5.61
  5.55
Revenue, $m
  9,004
  10,499
  12,120
  13,864
  15,730
  17,714
  19,813
  22,025
  24,348
  26,781
  29,324
  31,976
  34,739
  37,614
  40,604
  43,711
  46,941
  50,297
  53,785
  57,411
  61,181
  65,103
  69,184
  73,434
  77,860
  82,474
  87,284
  92,302
  97,540
  103,009
  108,723
Variable operating expenses, $m
 
  8,948
  10,303
  11,762
  13,322
  14,981
  16,736
  18,585
  20,528
  22,562
  24,688
  26,735
  29,045
  31,449
  33,949
  36,547
  39,248
  42,054
  44,970
  48,001
  51,154
  54,433
  57,845
  61,398
  65,100
  68,957
  72,979
  77,175
  81,554
  86,127
  90,904
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
  7,964
  8,948
  10,303
  11,762
  13,322
  14,981
  16,736
  18,585
  20,528
  22,562
  24,688
  26,735
  29,045
  31,449
  33,949
  36,547
  39,248
  42,054
  44,970
  48,001
  51,154
  54,433
  57,845
  61,398
  65,100
  68,957
  72,979
  77,175
  81,554
  86,127
  90,904
Operating income, $m
  1,040
  1,551
  1,816
  2,102
  2,408
  2,733
  3,077
  3,440
  3,820
  4,219
  4,636
  5,241
  5,693
  6,165
  6,655
  7,164
  7,693
  8,243
  8,815
  9,409
  10,027
  10,670
  11,339
  12,035
  12,761
  13,517
  14,305
  15,128
  15,986
  16,882
  17,819
EBITDA, $m
  1,479
  2,147
  2,479
  2,836
  3,217
  3,623
  4,052
  4,505
  4,980
  5,477
  5,997
  6,540
  7,105
  7,693
  8,304
  8,940
  9,600
  10,287
  11,000
  11,742
  12,513
  13,315
  14,150
  15,019
  15,924
  16,867
  17,851
  18,878
  19,949
  21,067
  22,236
Interest expense (income), $m
  209
  231
  300
  374
  455
  540
  631
  728
  829
  936
  1,048
  1,165
  1,287
  1,414
  1,546
  1,683
  1,826
  1,974
  2,128
  2,289
  2,455
  2,628
  2,809
  2,996
  3,191
  3,395
  3,607
  3,828
  4,058
  4,299
  4,550
Earnings before tax, $m
  732
  1,319
  1,516
  1,728
  1,953
  2,193
  2,446
  2,712
  2,991
  3,283
  3,588
  4,076
  4,407
  4,751
  5,109
  5,481
  5,867
  6,269
  6,687
  7,120
  7,572
  8,041
  8,530
  9,039
  9,569
  10,122
  10,698
  11,300
  11,928
  12,583
  13,269
Tax expense, $m
  199
  356
  409
  467
  527
  592
  660
  732
  808
  886
  969
  1,100
  1,190
  1,283
  1,379
  1,480
  1,584
  1,693
  1,805
  1,923
  2,044
  2,171
  2,303
  2,441
  2,584
  2,733
  2,889
  3,051
  3,220
  3,398
  3,583
Net income, $m
  510
  963
  1,107
  1,261
  1,426
  1,601
  1,785
  1,980
  2,183
  2,397
  2,619
  2,975
  3,217
  3,468
  3,730
  4,001
  4,283
  4,576
  4,881
  5,198
  5,527
  5,870
  6,227
  6,598
  6,986
  7,389
  7,810
  8,249
  8,707
  9,186
  9,686

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  531
  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
  15,883
  18,335
  20,975
  23,797
  26,798
  29,974
  33,320
  36,835
  40,516
  44,363
  48,375
  52,555
  56,905
  61,428
  66,129
  71,015
  76,092
  81,369
  86,854
  92,558
  98,491
  104,666
  111,095
  117,791
  124,771
  132,049
  139,641
  147,565
  155,839
  164,482
Adjusted assets (=assets-cash), $m
  13,618
  15,883
  18,335
  20,975
  23,797
  26,798
  29,974
  33,320
  36,835
  40,516
  44,363
  48,375
  52,555
  56,905
  61,428
  66,129
  71,015
  76,092
  81,369
  86,854
  92,558
  98,491
  104,666
  111,095
  117,791
  124,771
  132,049
  139,641
  147,565
  155,839
  164,482
Revenue / Adjusted assets
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
  0.661
Average production assets, $m
  6,990
  8,147
  9,405
  10,759
  12,207
  13,746
  15,375
  17,091
  18,894
  20,782
  22,755
  24,813
  26,957
  29,188
  31,508
  33,920
  36,426
  39,030
  41,737
  44,551
  47,476
  50,520
  53,687
  56,984
  60,419
  64,000
  67,732
  71,627
  75,691
  79,935
  84,369
Working capital, $m
  283
  -105
  -121
  -139
  -157
  -177
  -198
  -220
  -243
  -268
  -293
  -320
  -347
  -376
  -406
  -437
  -469
  -503
  -538
  -574
  -612
  -651
  -692
  -734
  -779
  -825
  -873
  -923
  -975
  -1,030
  -1,087
Total debt, $m
  4,518
  5,658
  7,063
  8,576
  10,193
  11,912
  13,732
  15,650
  17,664
  19,773
  21,977
  24,276
  26,671
  29,163
  31,755
  34,449
  37,249
  40,158
  43,181
  46,324
  49,593
  52,992
  56,530
  60,214
  64,052
  68,051
  72,221
  76,571
  81,112
  85,853
  90,805
Total liabilities, $m
  7,961
  9,101
  10,506
  12,019
  13,636
  15,355
  17,175
  19,093
  21,107
  23,216
  25,420
  27,719
  30,114
  32,606
  35,198
  37,892
  40,692
  43,601
  46,624
  49,767
  53,036
  56,435
  59,973
  63,657
  67,495
  71,494
  75,664
  80,014
  84,555
  89,296
  94,248
Total equity, $m
  6,188
  6,782
  7,829
  8,956
  10,161
  11,443
  12,799
  14,228
  15,729
  17,300
  18,943
  20,656
  22,441
  24,298
  26,230
  28,237
  30,323
  32,491
  34,745
  37,087
  39,522
  42,056
  44,692
  47,437
  50,297
  53,277
  56,385
  59,627
  63,010
  66,543
  70,234
Total liabilities and equity, $m
  14,149
  15,883
  18,335
  20,975
  23,797
  26,798
  29,974
  33,321
  36,836
  40,516
  44,363
  48,375
  52,555
  56,904
  61,428
  66,129
  71,015
  76,092
  81,369
  86,854
  92,558
  98,491
  104,665
  111,094
  117,792
  124,771
  132,049
  139,641
  147,565
  155,839
  164,482
Debt-to-equity ratio
  0.730
  0.830
  0.900
  0.960
  1.000
  1.040
  1.070
  1.100
  1.120
  1.140
  1.160
  1.180
  1.190
  1.200
  1.210
  1.220
  1.230
  1.240
  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
Adjusted equity ratio
  0.421
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427
  0.427

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  510
  963
  1,107
  1,261
  1,426
  1,601
  1,785
  1,980
  2,183
  2,397
  2,619
  2,975
  3,217
  3,468
  3,730
  4,001
  4,283
  4,576
  4,881
  5,198
  5,527
  5,870
  6,227
  6,598
  6,986
  7,389
  7,810
  8,249
  8,707
  9,186
  9,686
Depreciation, amort., depletion, $m
  439
  597
  663
  733
  809
  890
  975
  1,065
  1,159
  1,258
  1,361
  1,299
  1,411
  1,528
  1,650
  1,776
  1,907
  2,043
  2,185
  2,332
  2,486
  2,645
  2,811
  2,983
  3,163
  3,351
  3,546
  3,750
  3,963
  4,185
  4,417
Funds from operations, $m
  1,678
  1,560
  1,769
  1,995
  2,235
  2,491
  2,760
  3,045
  3,343
  3,655
  3,981
  4,274
  4,628
  4,996
  5,379
  5,777
  6,190
  6,620
  7,066
  7,530
  8,013
  8,515
  9,038
  9,582
  10,149
  10,740
  11,356
  11,999
  12,670
  13,371
  14,103
Change in working capital, $m
  34
  -15
  -16
  -17
  -19
  -20
  -21
  -22
  -23
  -24
  -25
  -27
  -28
  -29
  -30
  -31
  -32
  -34
  -35
  -36
  -38
  -39
  -41
  -42
  -44
  -46
  -48
  -50
  -52
  -55
  -57
Cash from operations, $m
  1,644
  1,575
  1,786
  2,012
  2,254
  2,510
  2,781
  3,067
  3,366
  3,679
  4,006
  4,301
  4,656
  5,025
  5,409
  5,808
  6,223
  6,653
  7,101
  7,567
  8,051
  8,554
  9,079
  9,624
  10,193
  10,786
  11,404
  12,049
  12,723
  13,426
  14,160
Maintenance CAPEX, $m
  0
  -366
  -427
  -492
  -563
  -639
  -720
  -805
  -895
  -989
  -1,088
  -1,191
  -1,299
  -1,411
  -1,528
  -1,650
  -1,776
  -1,907
  -2,043
  -2,185
  -2,332
  -2,486
  -2,645
  -2,811
  -2,983
  -3,163
  -3,351
  -3,546
  -3,750
  -3,963
  -4,185
New CAPEX, $m
  -643
  -1,157
  -1,258
  -1,354
  -1,448
  -1,539
  -1,629
  -1,717
  -1,803
  -1,888
  -1,973
  -2,058
  -2,144
  -2,231
  -2,320
  -2,412
  -2,506
  -2,604
  -2,707
  -2,814
  -2,926
  -3,043
  -3,167
  -3,298
  -3,435
  -3,580
  -3,733
  -3,894
  -4,064
  -4,244
  -4,434
Cash from investing activities, $m
  -1,364
  -1,523
  -1,685
  -1,846
  -2,011
  -2,178
  -2,349
  -2,522
  -2,698
  -2,877
  -3,061
  -3,249
  -3,443
  -3,642
  -3,848
  -4,062
  -4,282
  -4,511
  -4,750
  -4,999
  -5,258
  -5,529
  -5,812
  -6,109
  -6,418
  -6,743
  -7,084
  -7,440
  -7,814
  -8,207
  -8,619
Free cash flow, $m
  280
  51
  101
  166
  243
  332
  433
  545
  668
  802
  945
  1,051
  1,213
  1,383
  1,561
  1,747
  1,941
  2,142
  2,351
  2,568
  2,793
  3,025
  3,266
  3,516
  3,775
  4,043
  4,320
  4,609
  4,908
  5,219
  5,542
Issuance/(repayment) of debt, $m
  157
  1,295
  1,405
  1,512
  1,617
  1,720
  1,820
  1,918
  2,014
  2,109
  2,204
  2,299
  2,395
  2,492
  2,592
  2,694
  2,800
  2,909
  3,024
  3,143
  3,268
  3,400
  3,538
  3,684
  3,837
  3,999
  4,170
  4,350
  4,540
  4,741
  4,953
Issuance/(repurchase) of shares, $m
  42
  7
  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
  1,302
  1,405
  1,512
  1,617
  1,720
  1,820
  1,918
  2,014
  2,109
  2,204
  2,299
  2,395
  2,492
  2,592
  2,694
  2,800
  2,909
  3,024
  3,143
  3,268
  3,400
  3,538
  3,684
  3,837
  3,999
  4,170
  4,350
  4,540
  4,741
  4,953
Total cash flow (excl. dividends), $m
  76
  1,353
  1,506
  1,678
  1,860
  2,052
  2,252
  2,463
  2,682
  2,911
  3,149
  3,351
  3,608
  3,875
  4,153
  4,441
  4,740
  5,051
  5,375
  5,711
  6,061
  6,425
  6,804
  7,200
  7,612
  8,042
  8,491
  8,959
  9,448
  9,960
  10,494
Retained Cash Flow (-), $m
  -881
  -970
  -1,047
  -1,127
  -1,205
  -1,281
  -1,356
  -1,429
  -1,501
  -1,572
  -1,643
  -1,713
  -1,785
  -1,857
  -1,931
  -2,008
  -2,086
  -2,168
  -2,253
  -2,342
  -2,435
  -2,533
  -2,637
  -2,745
  -2,860
  -2,980
  -3,108
  -3,242
  -3,384
  -3,533
  -3,691
Prev. year cash balance distribution, $m
 
  376
  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
 
  759
  459
  551
  655
  770
  897
  1,034
  1,181
  1,339
  1,507
  1,637
  1,823
  2,018
  2,221
  2,433
  2,654
  2,883
  3,122
  3,369
  3,625
  3,892
  4,168
  4,455
  4,752
  5,062
  5,383
  5,717
  6,065
  6,427
  6,804
Discount rate, %
 
  5.70
  5.99
  6.28
  6.60
  6.93
  7.27
  7.64
  8.02
  8.42
  8.84
  9.28
  9.75
  10.24
  10.75
  11.29
  11.85
  12.44
  13.06
  13.72
  14.40
  15.12
  15.88
  16.67
  17.51
  18.38
  19.30
  20.27
  21.28
  22.34
  23.46
PV of cash for distribution, $m
 
  718
  409
  459
  507
  551
  588
  617
  637
  647
  646
  617
  597
  568
  532
  489
  442
  393
  342
  293
  246
  202
  163
  128
  99
  74
  55
  39
  27
  19
  12
Current shareholders' claim on cash, %
  100
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9
  99.9

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).

FINANCIAL RATIOS  of  Coca-Cola Femsa ADR (KOF)

Valuation Ratios
P/E Ratio 279.4
Price to Sales 15.8
Price to Book 23
Price to Tangible Book
Price to Cash Flow 86.7
Price to Free Cash Flow 142.4
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
LT Debt to Equity 70.5%
Total Debt to Equity 73%
Interest Coverage 5
Management Effectiveness
Return On Assets 5.3%
Ret/ On Assets - 3 Yr. Avg. 5.8%
Return On Total Capital 5.3%
Ret/ On T. Cap. - 3 Yr. Avg. 5.8%
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 11.6%
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 16.6% 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 5.7%, 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 5.3% 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 77.6%.

Life of production assets of 19.1 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%. 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 72.088 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 $5.0 billion.

RELATED COMPANIES Price Int.Val. Rating
FMX Fomento Econom 94.44 235.84  str.buy
PEP PepsiCo 117.39 59.61  sell
KO Coca-Cola 45.33 17.04  str.sell
COKE Coca-Cola Bott 227.52 693.72  str.buy

COMPANY NEWS

▶ Mexico's Femsa third-quarter profit jumps 385 pct   [Oct-26-17 06:04PM  Reuters]
▶ How To Invest In Mexican Stocks   [Sep-09-17 10:32AM  Motley Fool]
▶ 5 Discounted PEG Stocks for GARP Investors   [Aug-14-17 09:05AM  Zacks]
▶ New Strong Buy Stocks for August 9th   [Aug-09-17 07:50AM  Zacks]
▶ New Strong Buy Stocks for August 7th   [Aug-07-17 09:34AM  Zacks]
▶ Coca-Cola FEMSA posts 2Q profit   [Jul-24-17 07:37PM  Associated Press]
▶ Coca-Cola FEMSA Second Quarter 2017 Conference Call   [Jul-06-17 04:12PM  Marketwired]
▶ 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]
Financial statements 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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