Head to Head Analysis: Fomento Economico Mexicano SAB (NYSE:FMX) and Reeds (NYSE:REED)

Fomento Economico Mexicano SAB (NYSE:FMX) and Reeds (NASDAQ:REED) are both consumer staples companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, earnings, profitability, institutional ownership, valuation and analyst recommendations.

Dividends

Fomento Economico Mexicano SAB pays an annual dividend of $1.49 per share and has a dividend yield of 1.7%. Reeds does not pay a dividend. Fomento Economico Mexicano SAB pays out 43.2% of its earnings in the form of a dividend. Fomento Economico Mexicano SAB has increased its dividend for 2 consecutive years.

Earnings & Valuation

This table compares Fomento Economico Mexicano SAB and Reeds’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Fomento Economico Mexicano SAB $24.46 billion 1.30 $1.22 billion $3.45 25.71
Reeds $38.10 million 1.83 -$10.32 million ($0.38) -5.47

Fomento Economico Mexicano SAB has higher revenue and earnings than Reeds. Reeds is trading at a lower price-to-earnings ratio than Fomento Economico Mexicano SAB, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for Fomento Economico Mexicano SAB and Reeds, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fomento Economico Mexicano SAB 1 0 2 0 2.33
Reeds 0 0 1 0 3.00

Fomento Economico Mexicano SAB currently has a consensus price target of $100.00, indicating a potential upside of 12.73%. Reeds has a consensus price target of $5.00, indicating a potential upside of 140.38%. Given Reeds’ stronger consensus rating and higher probable upside, analysts plainly believe Reeds is more favorable than Fomento Economico Mexicano SAB.

Insider & Institutional Ownership

20.5% of Fomento Economico Mexicano SAB shares are held by institutional investors. Comparatively, 27.9% of Reeds shares are held by institutional investors. 45.4% of Reeds shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Risk & Volatility

Fomento Economico Mexicano SAB has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Reeds has a beta of 1.28, suggesting that its stock price is 28% more volatile than the S&P 500.

Profitability

This table compares Fomento Economico Mexicano SAB and Reeds’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fomento Economico Mexicano SAB 4.72% 6.88% 3.75%
Reeds -34.05% N/A -83.04%

Summary

Fomento Economico Mexicano SAB beats Reeds on 10 of the 17 factors compared between the two stocks.

About Fomento Economico Mexicano SAB

Fomento Económico Mexicano, S.A.B. de C.V., through its subsidiaries, operates as a bottler of Coca-Cola trademark beverages. The company produces, markets, and distributes Coca-Cola trademark beverages, including sparkling beverages; and waters, juices, coffee, tea, sports and energy drinks, and dairy and plant-based protein beverages. It also operates small-box retail chain stores in Mexico, Colombia, the United States, and Chile under the OXXO and Big John names; retail service stations for fuels, motor oils, lubricants, and car care products under the OXXO GAS name in Mexico; and drugstores in Chile and Colombia 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, 2018, it operated 17,999 OXXO small-format stores in Mexico, Colombia, Chile, and Peru; 2,361 drugstores in Mexico, Chile, and Colombia; and 539 OXXO GAS service stations. Fomento Económico Mexicano, S.A.B. de C.V. was founded in 1890 and is headquartered in Monterrey, Mexico.

About Reeds

Reed's, Inc. develops, manufactures, markets, and sells natural hand-crafted beverages and candies in the United States, Canada, Asia, Europe, Australia, and South America. Its products include Reed's ginger beers; Virgil's root beer and cream sodas; Flying Cauldron Butterscotch Beer; and Sonoma Sparkler branded sparkling juices. The company also provides private label products. Reed's, Inc. sells its products to specialty gourmet, natural food stores, retail stores, convenience stores, and restaurants through distributors and independent distributor partners, as well as directly. The company was formerly known as Original Beverage Corporation and changed its name to Reed's, Inc. in 2001. Reed's, Inc. was founded in 1987 and is based in Los Angeles, California.

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