KO  The Coca-Cola Company

Exchange

NYSE

Sector

Consumer Non-Durables

Industry

Beverages (Production/Distribution)

Market Cap.

194.88B

Vuru Grade

58.07/100

Current Price

$45.69
+0.20 (+0.44%)

Growth Price

$17.67
Overvalued by 61.32%

Company Metrics

  • P/E 48.25
  • P/S 4.99
  • P/B 8.82
  • EPS 0.95
  • Cash ROIC 18.97%
  • Cash Ratio 0.84
  • Dividend 1.48 / 3.25%
  • Avg. Vol. 9.59M
  • Shares 4.27B
  • Market Cap. 194.88B

Company Description

The Coca-Cola Company manufactures, distributes, and markets nonalcoholic beverage concentrates and syrups worldwide. It principally offers sparkling and still beverages. The company's sparkling beverages include nonalcoholic ready-to-drink beverages with carbonation, such as energy drinks, and carbonated waters and flavored waters. Its still beverages consist of nonalcoholic beverages without car... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

Best Buy: The Coca-Cola Co vs. PepsiCo, Inc. vs. Procter & Gamble Co
Motley Fool - Sep 24, 2017
Coca-Cola (NYSE:KO), Procter & Gamble (NYSE:PG) , and PepsiCo (NYSE:PEP) have been offering investors dividend increases for a combined 162 consecutive years.
Better Buy: The Coca-Cola Co vs. PepsiCo, Inc.
Motley Fool - Sep 13, 2017
When consumers are familiar and comfortable with a brand, they're willing to pay slightly more for that company's products.
The Coca-Cola Co.
Daily Report (registration) - Jun 29, 2017
Last year the top lawyer at The Coca-Cola Co. explained his legal department's approach to diversity. Bernhard Goepelt, the senior vice president, general counsel and chief legal counsel, was speaking at the company's Legal Diversity Link event, at ...
Akron Coca-Cola plant's union workers strike after failed contract negotiations - cleveland.com
Teamsters strike at Akron Coca-Cola distribution plant - Akron Beacon Journal
The Coca-Cola Co launches limited edition 'love' cans to support marriage ...
just-drinks.com (subscription) - 2 hours ago
The Coca-Cola Co has rolled out a limited edition pack design in Australia, to show support for the country's postal survey on marriage equality.
Has Christmas started already? Iconic Coca-Cola truck spotted in east London ... - Mirror.co.uk
Coca-Cola introduces new flavour for Australian heatwave - but would you try a ... - Daily Mail
The Coca-Cola Co (KO) Stock Is Expensive No Matter What Q2 Brings
Yahoo News - Jul 25, 2017
The Coca-Cola Co (NYSE:KO) continues to look like one of the most overvalued stocks in the market. Earnings are in decline, with the company guiding for a 1-3% drop in comparable EPS in 2017.
The Coca-Cola (KO) Q2 2017 Results - Earnings Call Transcript - Seeking Alpha
Coke Zero out, Coca-Cola Zero Sugar in due to recipe change - USA TODAY
The Best Stock in Georgia: The Coca-Cola Co.
Kiplinger Personal Finance - Jul 18, 2017
Under the leadership of CEO James Quincey, who took the reins May 1, Coca-Cola is positioning itself as a “total beverage company,” according to Credit Suisse, with plans to make and market five categories of beverages: Carbonated soft drinks, coffee ...
KC company acquires Coca-Cola bottling plant for $7.2M - Kansas City Business Journal
Coca-Cola's Corporate Brand Campaign Moves Beyond Soda
AdAge.com - Sep 17, 2017
Since James Quincey took over as Coca-Cola Co. CEO in May, the company in earnings calls and investor presentations has been selling itself as a "total beverage company" with a product portfolio that goes beyond its namesake cola brand.
Here's why McDonald's Coke tastes better than every other fast food chain - The Sun
Is the Coca-Cola truck coming back to Birmingham this year? - Birmingham Mail
Better Buy: The Coca-Cola Co. vs. Verizon Communications Inc.
Motley Fool - Jul 29, 2017
For true long-term investors, there's nothing more important than a company's sustainable competitive advantage -- often referred to as a "moat.
Erie Coca-Cola facility has new owner - GoErie.com
Pittsburgh-based ABARTA becomes one of largest Coca-Cola franchises in US - Observer-Reporter
Coca-Cola Isn't Just About Coke in New Corporate Branding Campaign
Creativity - Sep 18, 2017
Since James Quincey took over as Coca-Cola Co. CEO in May, the company in earnings calls and investor presentations has been selling itself as a "total beverage company" with a product portfolio that goes beyond its namesake cola brand.
I Still Can't Believe Coca-Cola Spent $2 Billion on Keurig - Motley Fool
This is the real reason Coke cans are red… and it has nothing to do with ... - The Sun
Coca-Cola: The Market's Most Overvalued Stock?
Seeking Alpha - Aug 28, 2017
In the American consumer culture, few brand names stand out in ways that rival the Coca-Cola Co. (KO). Established in Georgia in 1892, the company has long been a favorite of dividend investors looking to capitalize on yields that have proven to be ...
Coca-Cola Company (The) (KO) Closes 0.33% Down on the Day for August 28 - Equities.com
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for KO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate KO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$45.69 Current Price

$17.67 Growth Price (DCF)

Overvalued by 61.32%


Growth Rate Assumed by Market: 34.04%


Future Free Cash Flow Growth Rate: 5.5%


Discount Rate: 15.0%


Show Free Cash Flow numbers

Excellent Cash Return on Invested Capital over the past 5 years

KO has efficiently invested its financial resources in buildings, projects, and equipment, resulting in strong returns. Annual Reports can be useful in identifying the cause of one-time events and future sustainability.

KO has created $18.97 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 7.87B 7.99B 8.21B 7.98B 6.53B
divided by
Invested Capital 41.80B 41.98B 37.97B 43.26B 38.54B
Cash ROIC 18.81% 19.04% 21.62% 18.43% 16.96%

Excellent Return on Equity over the past 5 years

Over the past 5 years, KO has generated strong profits with money shareholders have invested. This is considered one of the best indicators of quality management. Beware of extremely high Return on Equity (> 50%) as this is often unsustainable.

KO has generated $21.21 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 9.09B 8.63B 7.12B 7.37B -
divided by
Stockholders' Equity 32.79B 33.17B 30.32B 25.55B 23.06B
Return on Equity 27.71% 26.00% 23.50% 28.83% -

Excellent Business Performance over the past 10 years

KO has been able to maintain profitability in good times and bad. This could mean KO has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

KO has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 5.50B 5.60B 6.19B 7.32B 6.55B 7.87B 7.99B 8.21B 7.98B 6.53B

Weak Balance Sheet

KO's financial position is not ideal. The key is to check whether KO is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash 4.31B 4.98B 9.21B 11.34B 14.04B 16.55B 20.27B 21.68B 19.90B 22.20B
Current Assets 12.11B 12.18B 17.55B 21.58B 25.50B 30.33B 31.30B 32.99B 33.40B 34.01B
Total Assets 43.27B 40.52B 48.67B 72.92B 79.97B 86.17B 90.06B 92.02B 90.09B 87.27B
Current Liabilities 13.23B 12.99B 13.72B 18.51B 24.28B 27.82B 27.81B 32.37B 26.93B 26.53B
Total Liabilities 21.53B 20.05B 23.87B 41.92B 48.34B 53.38B 56.88B 61.70B 64.54B 64.21B
Stockholder' Equity 21.74B 20.47B 24.80B 31.00B 31.64B 32.79B 33.17B 30.32B 25.55B 23.06B
Current Ratio 0.92 0.94 1.28 1.17 1.05 1.09 1.13 1.02 1.24 1.28
TL-to-TA 0.50 0.49 0.49 0.57 0.60 0.62 0.63 0.67 0.72 0.74

Consistent Reinvestment of Profits over the past 10 years

KO has consistently retained profits. This may put KO in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, KO can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 36.24B 38.51B 41.54B 49.28B 53.55B 58.05B 61.66B 63.41B 65.02B 65.50B
Retained Earnings Growth - 6.29% 7.85% 18.64% 8.67% 8.39% 6.23% 2.83% 2.54% 0.74%

Inconsistent Net Profit Margins over the past 10 years

KO potentially has a competitive advantage, however inconsistent profit margins are a cause for concern. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$18.24 of every $100 of Revenue have been pure profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 5.98B 5.81B 6.82B 11.81B 8.57B 9.09B 8.63B 7.12B 7.37B -
divided by
Revenue 28.86B 31.94B 30.99B 35.12B 46.54B 48.02B 46.85B 46.00B 44.29B -
Net Profit Margin 20.73% 18.18% 22.02% 33.63% 18.42% 18.92% 18.41% 15.49% 16.63% -

Varying Pricing Power over the past 10 years

KO has maintained substantial gross margins, suggesting that they have been able to set prices without consideration of the cost of goods sold. However, there is a substantial variation in their Gross Profit Margins from year-to-year, which indicates inconsistent performance. Look at reasons for this inconsistency to determine the likelihood of future sustainability.

$59.91 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit 18.45B 20.57B 19.90B 22.43B 46.54B 28.96B 28.43B 28.11B 26.81B -
divided by
Revenue 28.86B 31.94B 30.99B 35.12B 46.54B 48.02B 46.85B 46.00B 44.29B -
Gross Margin 63.94% 64.39% 64.22% 63.86% 100.00% 60.32% 60.68% 61.11% 60.53% -

Medium Capital Intensity over the past 10 years

KO has used a reasonable amount of their financial resources to invest in facilities and equipment required to produce its goods and services. This isn't perfect, but it shouldn't be an area of concern unless this number is strongly trending upwards.

30.23% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 1.65B 1.97B 1.99B 2.22B 2.92B 2.78B 2.55B 2.41B 2.55B 2.26B
divided by
Net Income 5.98B 5.81B 6.82B 11.81B 8.57B 9.09B 8.63B 7.12B 7.37B -
Capital Expenditure Ratio 27.55% 33.89% 29.21% 18.76% 34.06% 30.60% 29.56% 33.77% 34.66% -

Very Strong Dividend History over the past 10 years

KO has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests KO is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid 3.15B 3.52B 3.80B 4.07B 4.30B 4.60B 4.97B 5.35B 5.74B 6.04B
divided by
Shares Outstanding 2.33B 2.34B 2.33B 2.33B 2.32B 4.58B 4.51B 4.45B 4.41B -
Dividend Paid Per Share 1.35 1.51 1.63 1.74 1.85 1.00 1.10 1.20 1.30 -
Price at Year End 55.10 40.91 54.35 63.66 69.97 35.97 41.09 42.76 43.57 41.46
Dividend Yield 2.45% 3.68% 3.00% 2.74% 2.65% 2.79% 2.68% 2.81% 2.99% -

History of Stock Buybacks over the past 10 years

KO has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 2.33B 2.34B 2.33B 2.33B 2.32B 4.58B 4.51B 4.45B 4.41B -
Stock Bought Back - -0.21% 0.30% -0.17% 0.43% -49.32% 1.66% 1.33% 1.02% -
Share your thoughts about KO

Sign Up or Log In to start contributing!


Discussion
Sort By:
4
Posted by pbanik  (on September 18, 2012)
KO is expensive to buy right now, so what totallyrad510 said is correct. I would try to buy the stock somewhere under $25 if you're looking for an entry point. It's trading at over 20 times earnings. It might be worth looking at when it is trading at 12 times earnings or lower. EPS has only increased $0.01/share since the same quarter last year, so it's not a growth stock by any means.
http://financials.morningstar.com/income-statement/is.html?t=KO&region=USA&culture=en-us
1
Posted by Manju  (on July 18, 2012)
at what rate is it best to by KO for long term
1
Posted by totallyrad510  (on September 16, 2012)
The lowest possible. I recently went in for a semi-long term investment. See how the market looks Monday.