2 Wall Street analysts have issued “buy,” “hold,” and “sell” ratings for Embotelladora Andina SA ADR Series A in the last year. The consensus among Wall Street analysts is that investors should “hold” AKO.A shares. A hold rating indicates that analysts believe investors should maintain any existing positions they have in AKO.A, but not buy additional shares or sell existing shares. In spite of this setback, Embotelladora Andina remained the largest of Coca-Cola’s four Chilean-based franchisers and one of its anchors for doing business in South America.
- Return on invested capital (ROIC) measures how well a company generates cash flow relative to the capital it has invested in its business.
- I like to focus on undervalued companies that the market is ignoring, like an island of misfit toys.
- In Brazil, in addition to Coca-Cola products, its soft drinks were Schweppes Club Soda, Tónica, and Citrus, and three guaraná drinks.
- Embotelladora Andina also sold its agribusiness subsidiary in 1996 and repurchased Coca-Cola’s share of Vital in 1998.
- Looking at the shareholders list, a group of four families holds a 38% stake, Coca-Cola has 7.3%, and a total of 3.2% of the shares are listed in the USA as American Depositary Receipts (ADRs).
EMIS company profiles are part of a larger information service which combines company, industry and country data and analysis for over 145 emerging markets. Preferring value to growth, he tends to take a relatively conservative approach in his the white coat investor investing. His focus is on small and micro-cap stocks, which he believes is the area which offers the greatest opportunity to exploit market mis-pricings. Turning our attention to the risks for the bull case, I think there are two main ones.
Embotelladora Andina SA Categories
The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. When the ROIC is higher than the WACC, it implies the company is creating value for shareholders. For the past 12 months, Embotelladora Andina SA’s return on invested capital is 8.21, and its cost of capital is 5.62.
And Companhia Antarctica Paulista Industria Brasileira de Bebidas e Conexos. In addition, powerful Brahma cut the prices of its beer and soft drinks to frustrate the newcomer. Andina’s subsidiary was forced to close one of its three plants and lay off 800 employees. In Argentina, Edasa inherited short-term debts at high interest rates and operations in Mendoza and Rosario that had been losing money for three years.
Other Non-Alcoholic Beverages
Embotelladora Andina was founded by Carlos Vial Espantoso and other Chilean and U.S. investors in 1946 with the exclusive license to produce and distribute Coca-Cola products in Chile. Four years later, the company made a transition from the individual bottle toward the 24-bottle case, and Coca-Cola distribution was extended from the traditional sales point to a wide variety of institutions. In 1960 it opened a new Santiago plant that also served as its headquarters. In addition, many local people preferred a noncola fruit drink called guaraná. Rio Refrescos was making and selling such a drink, but its brand was not as popular as those offered by rivals Companhia Cervejaria Brahma, S.A.
History of Embotelladora Andina S.A.
Post the decline in its market value by a fifth, AKO trades at 10x P/E, at a discount to its long term average and its peer set as a result of elevated commodity costs and challenging consumer environment. Embotelladora Andina SA is a Coca-Cola bottler in Latin America, producing a wide array of beverages including carbonated soft drinks, water, fruit juices, energy drinks, and sports drinks under various Coca-Cola brands. The company also sells non-Coca-Cola branded teas, juices, beers, and spirits. Embotelladora Andina S.A., together with its subsidiaries, produces, markets, and distributes Coca-Cola soft drinks in Chile, Brazil, Argentina, and Paraguay. It also offers fruit-flavored beverages, juices, sports and energy drinks, ice tea, and bottled water. Embotelladora Andina invested $1 million in 1999 in Chile to offer retailers carrying its beverages—the small sweet shops, kiosks, and bakeries, for example—training in new sales and marketing techniques.
The GF Value is a proprietary measure that represents the current intrinsic value of a stock. It is calculated based on historical trading multiples, a GuruFocus adjustment factor based on the company’s past returns and growth, and future estimates of business performance. The GF Value Line provides an overview of the fair value at which the stock should ideally be traded. Embotelladora Andina SA ADR Series A declared a quarterly dividend on Wednesday, August 16th. Shareholders of record on Friday, January 1st will be given a dividend of $0.2062 per share on Thursday, August 17th.
First, several countries in Latin America have undergone significant political regime change over the past two years and we’ve witnessed mass protests across Chile, Brazil, and more recently Peru. This could lead to an outflow of investment from the region which could slow down economic growth. Second, the beverage industry is cyclical in nature and most Latin American countries are expected to register slow GDP growth in 2023.
Embotelladora Andina SA has a cash-to-debt ratio of 0.37, which ranks worse than 66.35% of 104 companies in the Beverages – Non-Alcoholic industry. Based on this, GuruFocus ranks Embotelladora Andina SA’s financial strength as 6 out of 10, suggesting software engineer vs programmer a fair balance sheet. If the stock price is significantly above the GF Value Line, it indicates overvaluation and a likely poor future return. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
Overall, GuruFocus ranks the profitability of Embotelladora Andina SA at 8 out of 10, which indicates strong profitability. Embotelladora Andina booked strong sales in 2023 and the weaker U.S. dollar since the start of 2023 could provide a boost to its financial performance this year. The company doesn’t look expensive in terms of P/E considering it was trading above 20x in 2019.
In the case of Embotelladora Andina SA, the stock appears to be significantly undervalued, suggesting that the long-term return of its stock is likely to be much higher than its business growth. SG&A dollars grew 2.1% YoY as a result of higher distribution costs across regions and increase in marketing expenses within Chile and Paraguay partially offset by freight tailwinds and lower marketing expenses in Argentina. EBITDA margin grew 37 bps YoY driven by stable gross margins and SG&A leverage. However, EBITDA margins continue to remain near three-year lows as a result of higher input cost inflation eroding profitability. Net income declined 52% YoY primarily due to reversal in provisions in Brazil along with higher taxes.
Plenty of fund managers worth their salt, including those who focus on foreign stocks, are out there mining for overlooked or oversold stocks right now. I post my portfolio and shortlist there and you can also find exclusive ideas from our community of investors. I like to focus on undervalued companies that the market is ignoring, like an island of misfit toys. Looking at the 2022 inflation and exchange rate data, we can see that the macroeconomic environment in Argentina and to some extent Chile was challenging, but the Brazilian real was strong. This gave a boost to the revenues of Embotelladora Andina when measured in U.S. dollars and Chilean pesos. Balance sheet position remains strong with the company ending with total cash balance of $350 mn ($311 mn in cash and $38 mn in investments) with a Net Debt/ EBITDA of just 1.5x.
This is likely to be offset by low single-digit to mid single-digit volume growth expected in Brazil translating to high single-digit sales growth. Growth is probably the most important factor in the valuation of a company. The faster a company is growing, the more likely it is to be creating value for shareholders, especially if the growth is profitable.