Pepsico (NYSE: PEP) and Fomento Economico Mexicano S.A.B. de C.V. (NYSE:FMX) are both large-cap consumer staples companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, risk, valuation, institutional ownership, earnings, analyst recommendations and profitabiliy.

Institutional & Insider Ownership

70.5% of Pepsico shares are owned by institutional investors. Comparatively, 23.9% of Fomento Economico Mexicano S.A.B. de C.V. shares are owned by institutional investors. 0.3% of Pepsico shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Pepsico pays an annual dividend of $3.22 per share and has a dividend yield of 2.8%. Fomento Economico Mexicano S.A.B. de C.V. pays an annual dividend of $1.32 per share and has a dividend yield of 1.3%. Pepsico pays out 68.2% of its earnings in the form of a dividend. Fomento Economico Mexicano S.A.B. de C.V. pays out 49.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Fomento Economico Mexicano S.A.B. de C.V. has increased its dividend for 44 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Pepsico and Fomento Economico Mexicano S.A.B. de C.V., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pepsico 0 4 11 0 2.73
Fomento Economico Mexicano S.A.B. de C.V. 0 1 4 0 2.80

Pepsico presently has a consensus target price of $122.67, indicating a potential upside of 5.10%. Fomento Economico Mexicano S.A.B. de C.V. has a consensus target price of $102.00, indicating a potential upside of 2.51%. Given Pepsico’s higher probable upside, equities analysts clearly believe Pepsico is more favorable than Fomento Economico Mexicano S.A.B. de C.V..

Earnings and Valuation

This table compares Pepsico and Fomento Economico Mexicano S.A.B. de C.V.’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pepsico $63.30 billion 2.63 $12.42 billion $4.72 24.73
Fomento Economico Mexicano S.A.B. de C.V. $25.35 billion 0.85 $3.09 billion $2.69 36.99

Pepsico has higher revenue and earnings than Fomento Economico Mexicano S.A.B. de C.V.. Pepsico is trading at a lower price-to-earnings ratio than Fomento Economico Mexicano S.A.B. de C.V., indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Pepsico has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500. Comparatively, Fomento Economico Mexicano S.A.B. de C.V. has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500.

Profitability

This table compares Pepsico and Fomento Economico Mexicano S.A.B. de C.V.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pepsico 10.77% 59.74% 9.72%
Fomento Economico Mexicano S.A.B. de C.V. 5.26% 8.42% 4.44%

Summary

Pepsico beats Fomento Economico Mexicano S.A.B. de C.V. on 13 of the 17 factors compared between the two stocks.

About Pepsico

PepsiCo, Inc. is a global food and beverage company. The Company’s portfolio of brands includes Frito-Lay, Gatorade, Pepsi-Cola, Quaker and Tropicana. The Company operates through six segments: Frito-Lay North America (FLNA), Quaker Foods North America (QFNA), North America Beverages (NAB), Latin America, Europe Sub-Saharan Africa (ESSA), and Asia, Middle East and North Africa (AMENA). The FLNA segment includes its branded food and snack businesses in the United States and Canada. The QFNA segment includes its cereal, rice, pasta and other branded food businesses in the United States and Canada. The NAB segment includes its beverage businesses in the United States and Canada. The Latin America segment includes its beverage, food and snack businesses in Latin America. The ESSA segment includes its beverage, food and snack businesses in Europe and Sub-Saharan Africa. The AMENA segment includes its beverage, food and snack businesses in Asia, Middle East and North Africa.

About Fomento Economico Mexicano S.A.B. de C.V.

Fomento Economico Mexicano, S.A.B. de C.V. (FEMSA) is a holding company. The Company’s segments are Coca-Cola FEMSA, FEMSA Comercio-Retail Division and FEMSA Comercio-Fuel Division. The Company conducts its operations through holding companies, such as Coca-Cola FEMSA, S.A.B. de C.V. and subsidiaries (Coca-Cola FEMSA), which produces, distributes and sells beverages; FEMSA Comercio, S.A. de C.V. and subsidiaries (FEMSA Comercio), which consists of a Retail Division operating various small-format chain stores, and CB Equity LLP, which holds its equity investment in Heineken N.V., and Heineken Holding N.V. The Company’s Coca-Cola FEMSA produces, markets, sells and distributes Coca-Cola trademark beverages through standard bottler agreements in certain territories in the countries, in which it operates. Coca-Cola FEMSA also sells bottled water products. FEMSA participates in the retail sector primarily through FEMSA Comercio.

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