Cott (COT) vs. FEMSA (FMX) Critical Contrast

Cott (NYSE: COT) and FEMSA (NYSE:FMX) are both consumer staples companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, analyst recommendations, valuation, risk and dividends.

Profitability

This table compares Cott and FEMSA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cott 14.54% 1.79% 0.44%
FEMSA 8.57% 13.14% 7.22%



Risk and Volatility

Cott has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, FEMSA has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Cott and FEMSA, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cott 0 3 5 0 2.63
FEMSA 0 2 4 0 2.67

Cott presently has a consensus price target of $17.67, suggesting a potential upside of 11.33%. FEMSA has a consensus price target of $115.75, suggesting a potential upside of 37.60%. Given FEMSA’s stronger consensus rating and higher probable upside, analysts clearly believe FEMSA is more favorable than Cott.

Insider & Institutional Ownership

19.7% of FEMSA shares are owned by institutional investors. 3.0% of Cott shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

Cott pays an annual dividend of $0.24 per share and has a dividend yield of 1.5%. FEMSA pays an annual dividend of $1.42 per share and has a dividend yield of 1.7%. Cott pays out 342.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FEMSA pays out 23.5% of its earnings in the form of a dividend. FEMSA is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares Cott and FEMSA’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cott $2.27 billion 0.98 -$1.40 million $0.07 226.71
FEMSA $24.42 billion 1.23 $2.16 billion $6.03 13.95

FEMSA has higher revenue and earnings than Cott. FEMSA is trading at a lower price-to-earnings ratio than Cott, indicating that it is currently the more affordable of the two stocks.

Summary

FEMSA beats Cott on 11 of the 16 factors compared between the two stocks.

About Cott

Cott Corporation, together with its subsidiaries, operates as a route based service company in North America and Europe. It operates in three segments: Route Based Services; Coffee, Tea and Extract Solutions; and All Other. The company's product portfolio includes bottled water, coffee, brewed tea, water dispensers, coffee and tea brewers, specialty coffee, liquid coffee or tea concentrate, single cup coffee, cold brewed coffee, iced blend coffee or tea beverages, blended teas, hot tea, sparkling tea, coffee or tea extract solutions, filtration equipment, hot chocolate, soups, malt drinks, creamers/whiteners, cereals, beverage concentrates, and mineral water. It provides its services to residences, businesses, restaurant chains, hotels and motels, small and large retailers, and healthcare facilities. The company serves approximately 2.4 million customers or delivery points through its platform, sales and distribution facilities, and fleets, as well as through wholesalers and distributors. Cott Corporation was incorporated in 1955 and is based in Mississauga, Canada.

About FEMSA

Fomento Económico Mexicano, S.A.B. de C.V., through its subsidiaries, operates as a bottler of Coca-Cola trademark beverages and a chain of small-format stores. The company produces, markets, distributes, and sells Coca-Cola trademark beverages, including sparkling beverages, such as colas and flavored sparkling beverages; and waters and still beverages comprising juice, coffee, tea, milk, value-added dairy, sports, energy, and plant-based drinks. It also operates small-box retail chain stores in Mexico, Colombia, and the United States under the OXXO and Big John names; retail service stations for fuels, motor oils, lubricants, and car care products in Mexico under the OXXO GAS name; and drugstores in Chile, Colombia, and Mexico under the Cruz Verde, YZA, La Moderna, and Farmacon names. In addition, the company engages in the production and distribution of coolers, commercial refrigeration equipment, and plastic cases, as well as food processing, preservation, and weighing equipment; and provision of logistic transportation and maintenance, point-of-sale refrigeration, and plastics solutions. As of December 31, 2017, it operated 16,526 OXXO small-format stores in Mexico and Colombia, and 51 stores in Chile; 1,123 points of sale in Mexico, 882 in Chile, and 220 in Colombia; and 452 service stations in Mexico. Fomento Económico Mexicano, S.A.B. de C.V. was founded in 1890 and is headquartered in Monterrey, Mexico.

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