Today in the Motley Fool's ASX World Cup we have the slightly left-field matchup between drinks maker Coca-Cola Amatil Ltd (ASX: CCL) and retail property giant Westfield Group (ASX: WDC).
The two companies are staples in many investor portfolios, but both are also going through a period of change. Coca Cola Amatil is undertaking a strategic review of operations following a rapid decline in first quarter trading conditions, while Westfield Group has proposed to merge and restructure its business with Westfield Retail Trust (ASX: WRT) which would change the future profile of the two companies.
Regardless, going head-to-head today, here is how they stack up:
The key stats:
|
Factor |
Measure |
Westfield Group (ASX: WDC) |
Coca-Cola Amatil (ASX: CCL) |
| Size | Market cap |
$22.3 billion |
$6.95 billion |
| Cheapness | Full year P/E ratio |
14.3 |
13.8¹ |
| Operations | Net margin % |
46% |
16.2% |
| Balance sheet | Debt/Equity ratio |
1.27 |
2.8 |
| Dividend | % Yield |
4.8% |
6.5% |
Notes: ¹earnings before significant items, full year to 31 December 2013.
Operations
Both Westfield Group and CCL are well established and expert operators in their fields. Coca Cola Amatil, with its formidable brand and distribution network produced a net margin of 16.2% for the full year to 31 December 2013.
However compared to the substantial property revenues and relatively low operating expenses incurred by Westfield Group in 2013, CCL comes off second best letting Westfield through for an early goal.
Goal: Westfield Group.
Balance Sheet
Despite the high capital requirements of property development, Westfield Group maintains a strong balance sheet and relatively low debt to shareholder equity. Coca Cola for its part has total liabilities almost three times total equity.
Although high debt is not inherently bad, it could become a bigger risk if interest rates start rising, or CCL's margins come under more pressure.
Goal: Westfield Group
Dividends
A comparison of trailing dividend yields shows Coca Cola Amatil as having the upper hand over Westfield. That is, until we factor in CCL's declining sales growth and earnings going forward. If trading conditions continue to deteriorate it is likely the dividend could be cut.
For its part, the strong cashflows of Westfield Group support an ongoing dividend, but this may also change if restructured.
Goal: No goals.
Full Time:
As both companies battle to structure themselves for success going forward, Westfield takes a slight victory with its robust operations and strong balance sheet.
