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Coca-Cola FEMSA (New York Stock Exchange:KOF) is being viewed favorably by analysts and investors after publishing a solid second-quarter earnings report.
Total revenue for the quarter increased 13.1%, driven primarily by volume growth that offset unfavorable currency translation related primarily to depreciation. of the Brazilian real and the Argentine peso compared to the Mexican peso. On a currency-neutral basis, Coca-Cola FEMSA (KOF) total revenue increased by 17.9%.
Carbonated beverage volumes grew 6.8%, driven primarily by 7.8% growth for the Coca-Cola brand. Still beverages grew 13.2% and bottled water grew 13.4%.
Meanwhile, gross profit increased 17.2%, leading to a margin expansion of 160 basis points to 46%. The increase was primarily driven by operating leverage resulting from strong revenue performance, along with favorable packaging costs and hedging strategies. Those effects were partially offset by higher sweetener costs and a significant depreciation of the Argentine peso compared to the prior year. The company also reported that operating profit increased 13.8% and operating margin exceeded 14%.
On Wall Street, Bank of America said it is optimistic about KOF's Buy rating. The firm expects strong demand for soft drinks to continue in Mexico, Brazil and Guatemala. “This, together with better prices and lower raw material costs, should support its growth of around 15% in EBITDA in 2024-25,” BofA updated.
Coca-Cola FEMSA (KOF) shares are up more than 5% since the second-quarter earnings report was released, and are up more than 13% since Seeking Alpha analyst Delta Dividends recommended the stock two weeks ago.
