FEMSA Offers Long-Term Value, But 2018 Won't Be A Banner Year

FEMSA’s (FMX) performance over both the past few months and the past year has been decidedly mediocre, as the company continues to work through some restructuring efforts at Coca-Cola FEMSA (KOF) while building up its Health (drugstores) and Fuel (gas station) operations. Add in foreign currency volatility and undeployed capital from a partial sale of its Heineken (OTCQX:HEINY) stake, and there are a lot of moving parts working against the bottom line.

I continue to believe that FEMSA is a well-run conglomerate that offers good exposure to Latin American, and particularly Mexican, consumer spending growth, but challenges in Mexico, Brazil, and the Philippines are likely to keep a lid on performance in 2018. A fair value in the neighborhood of $105 still makes this a name worth considering, but I expect the shares to mark time at least until the elections in Mexico are decided.

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FEMSA Offers Long-Term Value, But 2018 Won't Be A Banner Year