Last Update 11 Dec 25

Fair value Decreased 5.59%

KOF: Higher Mexico Beverage Tax Will Support Future Upside Potential

Analysts have trimmed their price target on Coca-Cola FEMSA to about $104 from roughly $110, citing modestly lower growth expectations but reaffirming that Mexico's higher beverage excise tax on Oxxo sales should have limited impact and could even prove slightly positive for revenue.

Analyst Commentary

Analysts covering Coca-Cola FEMSA have modestly reduced their price targets while largely maintaining a constructive stance on the stock, highlighting both resilient fundamentals and emerging risks around taxation and growth normalization.

Bullish Takeaways

Bullish analysts emphasize that the higher beverage excise tax on Oxxo sales in Mexico is not expected to have a material impact on volumes or top-line performance, supporting a resilient earnings outlook.
Some see the tax change as potentially slightly positive for revenue, suggesting management can pass most of the incremental cost through to prices without eroding demand, which supports margin stability.
The retention of Overweight ratings alongside the reduced price targets signals continued confidence in execution and in the long-term growth framework, even under a more conservative macro backdrop.
Updated valuation work still suggests upside from current trading levels, with analysts pointing to Coca-Cola FEMSA's scale, pricing power, and defensive beverage portfolio as key supports for the equity story.

Bearish Takeaways

Bearish analysts point to the step down in price targets, from prior levels above $110 toward the $100 to $105 range, as evidence that growth expectations are being recalibrated lower.
There is caution that repeated tax adjustments, even if individually manageable, could cumulatively pressure affordability over time and limit volume growth in more price-sensitive consumer segments.
Some see less room for multiple expansion in the near term, arguing that the shares already reflect much of the company's operational strengths and defensive profile.
Execution risks around further regulatory changes and potential cost inflation are cited as reasons to temper expectations for rapid earnings acceleration, which could limit the pace of re-rating even with supportive long-term fundamentals.

What's in the News

Coca-Cola FEMSA, S.A.B. de C.V. announced a quarterly dividend of USD 0.8996 per share, reflecting an increase in shareholder returns. (Key Developments)
The dividend will be payable on October 27, 2025, providing a specific timeline for investors to receive cash distributions. (Key Developments)
The ex-dividend and record dates are both set for October 14, 2025, establishing the cutoff for shareholders to qualify for the upcoming payout. (Key Developments)

Valuation Changes

Fair Value: Fallen slightly, from about $110.03 to roughly $103.88 per share, reflecting a modestly more conservative outlook.
Discount Rate: Unchanged at 8.88 percent, indicating no shift in the assumed risk profile or cost of capital.
Revenue Growth: Trimmed marginally, from approximately 6.19 percent to about 6.12 percent, signaling slightly lower long term growth expectations.
Net Profit Margin: Risen very slightly, from around 8.68 percent to about 8.68 percent, suggesting a small improvement in projected profitability.
Future P/E: Reduced modestly, from roughly 18.15x to about 17.00x, implying a somewhat lower valuation multiple on forward earnings.

Expansion of digital platforms and strategic investments are likely to enhance customer engagement, boosting revenue and earnings in Brazil and Mexico.
Cost-saving initiatives and volume growth in key markets could strengthen net margins and improve overall financial performance.
Challenging macroeconomic conditions and competitive pressures in key markets threaten revenue and profitability, with regional dependence amplifying financial risks.

Catalysts

About Coca-Cola FEMSA. de

A franchise bottler, produces, markets, sells, and distributes Coca-Cola trademark beverages in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Brazil, Argentina, and Uruguay.What are the underlying business or industry changes driving this perspective?

Coca-Cola FEMSA's expansion of its Juntos+ digital platform and sales force enabler is expected to improve sales operations and customer engagement, leading to potential revenue growth and improved earnings in Brazil and soon in Mexico.
Strategic capacity investments and supply chain adjustments are anticipated to enhance customer service and cost efficiency, positively impacting net margins and overall earnings in several markets, notably Mexico and Brazil.
Efficiency and cost-saving initiatives across regions, particularly focusing on procurement and supply chain, are aimed at mitigating margin pressures, which could help increase net margins and improve earnings.
Volume growth in key markets such as Guatemala, Argentina, and Uruguay, coupled with favorable pricing strategies and product mix enhancements, could bolster revenue and gross profit margins going forward.
The expected completion of plant expansions and protective projects, such as in Porto Alegre, is aimed at restoring full production capacity and reducing logistics costs, which should support net margin improvement in the coming quarters.

Coca-Cola FEMSA. de Earnings and Revenue Growth

Coca-Cola FEMSA. de Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Coca-Cola FEMSA. de's revenue will grow by 6.5% annually over the next 3 years.
Analysts assume that profit margins will increase from 8.2% today to 8.5% in 3 years time.
Analysts expect earnings to reach MX$29.6 billion (and earnings per share of MX$146.22) by about September 2028, up from MX$23.6 billion today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as MX$25.5 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 20.0x on those 2028 earnings, up from 13.9x today. This future PE is lower than the current PE for the US Beverage industry at 24.4x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 8.7%, as per the Simply Wall St company report.

Coca-Cola FEMSA. de Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The macroeconomic backdrop in key markets, such as Mexico and Colombia, is challenging, leading to decreased consumer confidence and volume declines, which can impact revenue negatively.
Increased competitive intensity and promotional activity within the Mexican market are squeezing margins and pressuring the company's profitability, suggesting a potential negative impact on net margins.
Geographic concentration risks, with reliance on Mexico and Brazil for significant portions of revenue, expose Coca-Cola FEMSA to regional economic downturns; this can lead to fluctuations in earnings if local economies weaken further.
Operating margin contraction by 30 basis points is influenced by decreased operating leverage and increased operating expenses like freight and labor, indicating a potential strain on profit margins.
FX volatility and the unfavorable macroeconomic environment in regions like Colombia and Mexico could result in higher financial costs and exchange rate losses, thereby negatively affecting net earnings.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $117.698 for Coca-Cola FEMSA. de based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $200.0, and the most bearish reporting a price target of just $93.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be MX$349.2 billion, earnings will come to MX$29.6 billion, and it would be trading on a PE ratio of 20.0x, assuming you use a discount rate of 8.7%.
Given the current share price of $83.86, the analyst price target of $117.7 is 28.7% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Digital And Capacity Advancements Will Transform Brazil And Mexico